1 TABLE OF CONTENTS

CHAPTER 8 ECONOMIC A ND EMPLOYMENT IMPACT S

................................ .............. 2 8.0 Impacts and Costs

................................ ................................ ................................ ................... 2 8.1 Base line emissions

................................ ................................ ................................ ................. 22 8.2 Emission Reductions

................................ ................................ ................................ ............. 23 8.3 Endangered Species Act

................................ ................................ ................................ ....... 44 8.4 Energy Impacts

................................ ................................ ................................ ..................... 46 8.5 Compli ance Costs

................................ ................................ ................................ .................. 94 8.6 Economic and Employment Impacts

................................ ................................ ................ 1432 CHAPTER 8 ECONOMIC A ND EMPLOYMENT IMPACT S

Part 1

- Sections 8.0 Through 8.6

8.0 IMPACTS AND COST S

Comment 1: Commenters stated that the CPP is a major federal action warranting NEPA review, and that EPA should voluntarily develop an EIS for the proposed rule to satisfy each criteria needed to inform EPA regarding whether to voluntarily develop a NEPA document. Th e commenters suggested that the EIS process would allow: improved coordination with other federal agencies, such as FERC, which may be involved in future licensing actions; assessment of the large

- scale environmental impacts that may result from the build

- out of the nation's
energy

- supply infrastructure that may arise as a result of the Proposed Rule's mandates; expansion of public involvement to address matters of controversy such as the significant reliability impacts the will result from the proposed rul e implementation; full consideration of impacts on special resources and public health.

The commenters also discussed the possible elements of the build out, including more than 100 GW of generating capacity, associated electrical transmission infrastruct ure, natural gas transmission infrastructure, and renewable

- energy capacity, some of which may be constructed in remote or as

- yet undeveloped areas. The commenters stated that some of the impacts will fall disproportionately on minority or low

- income popul ations and trigger environmental justice implications without a robust EIS process.

Commenters stated that the proposed rule should be evaluated through an Environmental Impact Statement (EIS).

Response 1: Please see Section 1.15 of this Response to Comme nts document that addresses the legal applicability of NEPA to Clean Air Act regulations. As discussed in Section 1.15, NEPA does not apply to CAA regulations. EPA has conducted an extensive analysis of the energy and environmental impacts of the Clean Power Plan in technical support documents such as the GHG Mitigation Measures TSD for the Final CPP , CO2 Emission Performance Rate and Goal Computation, Resource Adequacy and Reliability Analysis, and the Regulatory Impact Analysis (RIA) developed for the final emission guidelines. EPA specifically discusses reliability considerations in section II

. D .3 of the preamble for the final rule and section 8.9 of this response to comments document. Impacts of the CPP are discussed in Section XI of the preamble for the final rule.

As discussed in Section VIII of the preamble for the final rule, states will make the ultimate decisions as to how the emission guidelines will be implemented. States will be afforded flexibilities in compliance with the CPP. In developing their compliance p lans , states are encouraged to consider potential local environmental impacts, as well as p otential impacts on vulnerable communities. See section IX of the preamble for the final rule for a discussion of community considerations. The CPP allows for flexibilities that guarantee a continued reliance on a diverse energy mix in electricity generation, and also allows for a long implementation period in order to ease the impacts associated with transitioning to a lower carbon energy mix.3 Com ment 2: Commenters stated that the proposed rule does not consider the environmental and public health impacts associated with natural gas extraction. The commenters further stated that fracking enjoys broad exemptions from environmental laws, and the prop osed rule must consider the social and environmental impacts when developing standards.

Response 2 : When estimating the environmental impacts of the CPP, the EPA does consider the impact of the guidelines on methane emissions associated with projected incr eases in the demand for natural gas and decreases in the demand for coal by the electricity sector for electricity generation. EPA’s methane analysis is presented in the Appendix to Chapter 3 of the RIA conducted for the proposed and final emission guideli nes. See also the response to section 8.2 comment 18 below

. The analysis found that the net upstream methane emissions from natural gas systems and coal mines and CO2 emissions from flaring of methane will likely decrease under the proposed guidelines. The estimated impacts to the natural gas and coal markets are illustrative of actions that may be taken to comply with CPP

. States and sources affected will make the ultimate decisions as to how to comply with the CPP and actual methane emission changes ma y differ from those estimated by EPA.

The CPP is designed to address carbon emissions associated with electricity production. Regulatory actions undertaken under the Clean Air Act as well as voluntary programs may address emissions from other sectors such as the oil and gas industry. As discussed in the President’s Climate Action Plan Strategy to Reduce Methane Emissions 1 , EPA is assessing methane emissions from the oil and gas industry and considering regulatory action. Potential actions taken to addr ess methane emissions from the oil and gas industry will build upon successful regulatory actions and voluntary programs already being undertaken by the EPA.

Comment 3: Commenters summarized a recent Electricity Journal study and applied the methodology i n that study to state that taking risk associated with generation types into account is important to arrive at optimal decisions and to demonstrate a rigorous methodology that can be easily implemented by public utility commissions. The commenters stated t hat the optimal portfolio:

• does not include nuclear

• includes 15% to 16% Gas

• accounts Wind for 34

- 48%, depending on the cost of integration

• includes Hydro in the range of 21% to 34%

1 https://www.whitehouse.gov/sites/default/files/strategy_to_reduce_methane_emissions_2014

- 03

- 28_final.pdf4 The commenters concluded that:

• if the decision maker ignores risk and carbon mitigation, the preferred portfolio is 96% gas.

• the cost increase resulting from a long term zero carbon policy (i.e., gas with carbon capture replacing unabated gas), is relatively small.

• an approach to zero carbon emissions that is not risk awar e increases the expected cost by just under 20%.

• an optimal portfolio strategy keeps it under 13%.

• controlling the cost of integrating large shares of wind is important, as it can add 2 to 4% to the cost of the optimal portfolio.

Response 3: The EPA ackn owledges the comment. A variety of factors may reasonably be considered by states, U.S. territories and tribes in optimal implementation planning of the emission guidelines. The CPP when fully implemented, will achieve significant reductions in CO2 emissi ons by 2030. At the same time, the guidelines offer states and utilities substantial flexibility and latitude in achieving these reductions. In the final rule, the EPA has established a CO2 emission performance rate for each of two subcategories of fossil fuel

- fired EGUs

-- fossil fuel

- fired electric steam generating units and stationary combustion turbines. The performance rates reflect the “best system of emission reductions ... adequately demonstrated” for CO2 emissions from the EGU source category. The gu idelines also provide for the development, submittal and implementation of state plans that implement the CO2 emission performance rates, either directly by means of source

- specific requirements or through measures that achieve equivalent CO2 reductions fr om the same group of EGUs. States, U.S. territories, and tribes with one or more affected EGUs will be required to develop and implement plans to ensure that their affected EGUs, individually, in aggregate, or in combination with other measures undertaken by the state, achieve the equivalent of the final CO2 emission performance rates by 2030.

Comment 4: Commenters listed issues with meeting the rulemaking timelines.

Commenters stated that the rulemaking timeline does not allow adequate time to meet inter im goals. The commenters further stated that the interim compliance average period is inconsistent with state planning processes, market schedules and utility investment decision

- making and the 2020 compliance goals limit the ability of states, electric ut ilities and system operators to manage what could be a large number of simultaneously retiring coal

- based units. The commenters estimated that 46

- 49 GWs of coal

- based units will close before 2020, in addition to the approximately 70 GWs of announced coal

- b ased unit closures that will occur between 2010 and 2022, amounting to nearly one third of the U.S. existing coal

- based closing in a decade. The commenters suggested that this will have significant implications for system reliability and that the interim c ompliance average deprives states of the ability to schedule these closures in a5 reasonable way to maintain reliability and minimize costs. The commenters recommended that EPA eliminate interim compliance goals and allow states to establish an individualiz ed glide path to 2030 compliance because the interim goals require significant changes and upgrades to the way power is generated, transmitted, consumed and integrated.

Commenters stated that the ERCOT grid has limited interconnections to the rest of count ry and also transmission line limitations into the non

- ERCOT Texas utilities that operate in multi

- state RTOs, and therefore has limited ability to import power from other RTOs. As noted previously, the commenters stated that transmission line planning and construction to address these issues typically takes 8.5 years, which will create timing issues if the 111(d) rule is implemented.

Commenters stated that there is not enough time between 2016 and 2020 to plan for and replace the lost coal plant capacity as well as resolve existing transmission constraints that may prevent replacement generation from being fully utilized. The commenters cited a Fall 2014 preliminary study of impacts to East Texas that concludes the compliance timeline presents significant problems with resource adequacy, estimates compliance costs would be $55

- 90 billion on a net present value basis, and results in an additional 14 GW of coal retirements. The study also noted that regional compliance and carbon reduction measures beyond EPA 's four building blocks provide the most economic options for meeting the 111(d) rule CO2 reduction targets. The commenters assumed that many RTOs in the U.S. presumably have similar 5

- 6 year timelines for constructing transmission lines, which conflicts w ith the magnitude and timeline of coal plant retirements expected under the rule. The commenters stated that utilities and generators will be required to quickly find other sources of generation to serve their customers and also find a way to deliver this capacity to their customers; however, existing transmission constraints will prevent generation from being able to serve where it is needed most for the foreseeable future.

The commenters cited and echoed comments filed by MISO, which recommended that EPA eliminate the interim emission performance period and levels from the rule and that the final rule provide "structured flexibility to support a variety of compliance strategies to preserve reliability of the electric system."

Commenters stated that the t ime frame necessary to plan, permit, and construct generation or transmission assets to meet resource needs is thrown into further flux due to changes in the NODA, which exacerbates an already existing concern with the planning horizon needed to meet futur e resource needs and could jeopardize reliability of the grid. The commenters further stated concern about the impact of the proposed rule on electricity cost should the cumulative worst case impact of various options introduced by the NODA be adopted in t he final rule.

Commenters stated that the suggested changes in the NODA could be very dramatic to any given state and that one month's consideration is inadequate and insufficient time for rule consideration.

Commenters suggested that EPA should re

- evalu ate the compliance timeframes while considering the remaining useful life of the affected EGUs that have recent or soon

- to

- be installed air pollution controls, and that it should be the state's role to determine how it complies with the ultimate 2030 stand ard. Therefore, the commenters strongly recommended eliminating the interim compliance period and interim target. The commenters listed the following impacts6 as major potential unintended consequences of the proposed rule: stranded utility assets; higher

r ates due to constrained economic dispatch in regional wholesale markets; risk to grid reliability; and market distortions if issues regarding the transfer of renewable generation in terms of MWh between states are not addressed. The commenters stated that several utility stakeholders have commented that the interim period forces an impending "compliance cliff" beginning in 2020 that does not consider potential stranded assets and does not afford them the requisite time to prepare for compliance by properly going through their integrated planning process. The commenters further added that Kentucky ratepayers will be burdened with a $4.5 billion price tag for compliance with the MATS rule if retrofitted plants, which have an assumed remaining useful life of 20

- 30 years, are not allowed to operate.

Finally, because of the regional nature of wholesale markets, the commenters stated that whether or not Kentucky chooses to be a part of a multi

- state collaborative, the implementation of other state plans will poten tially impact the ability to ensure that Kentucky ratepayers are afforded the least cost power to meet their needs.

Commenters also discussed market distortions. The commenters stated that renewable generators tend to bid into the market at a price of zer o or even negative as well as tends to reduce the run time of primarily natural gas generation, but it also tends to replace coal plants in off

- peak hours. The commenters added that the level of renewable energy required by Rule 111(d) will further distort energy market prices, and provided a figure to illustrate how the energy production profile is altered when wind generation displaces natural gas production.

Response 4: Commenters discuss issues regarding the timing of implementation of the CPP. Issues involving timing of implementation of the CPP are discussed in Section VIII of the final rule preamble and Chapter 5 of this response to comments document. To facilitate the state planning process, this final rule establishes guidelines for the development , submittal, and implementation of state plans. The final rule describes the components of a state plan, the additional latitude states have in developing strategies to meet the emission guidelines, and the options they have in the timing of submittal of t heir plans. This final rule also gives states considerable flexibility with respect to the timeframes for plan development and implementation, as well as the choice of emission reduction measures. The final rule provides up to 2030 for full implementation of all emission reduction measures, with incremental steps for planning and then for demonstration of CO 2 reductions that will ensure that progress is being made in achieving CO 2 emission reductions. States will be able to choose from a wide range of emiss ion reduction measures, including measures that are not part of the Best System of Emission Reductions (BSER), as discussed in detail in Section VIII. K of the preamble.

Regarding concerns about coal retirements, reliability, cost minimization and market distortions, the final rule does not require any level of “redispatch” or shift in generation from one kind to source to another. States have wide latitude to choose the policies and measure that they will include in their state plans to achieve the reductions they need to achieve their state goals. The June 2014 proposal featured several important elements: state

- specific, rather than source

specific goals; a 10

- year int erim goal that could be met “on average” over the 10

- year period between 2020 and 2029; and a “portfolio” option for state plans. These features were intended to maximize the range of choices that states and utilities could select in order to achieve their emission limitations at low cost while ensuring electric system reliability. The state goals7 reflected an approach to the BSER that was intended to capture both the unique interconnected nature of the utility power sector and the set of actions, strategie s and programs that are already under way at the state and utility level that have been resulting in CO 2 emission reductions. They also reflected the fact that each state has its own energy profile and state

- specific policies and needs relative to the prod uction and use of electricity. The final guidelines continue to embrace this basic approach, but they also incorporate significant changes that respond directly to the comments, requests and concerns of states and other stakeholders, while better serving t he critical objectives of the basic approach of the proposal.

Together with the proposal, this final rule is the product of one of the most extensive and long

running public engagement processes the EPA has ever conducted, starting in the summer of 2013 an d continuing through December 2014, and resulting in millions of comments from stakeholders, which we have carefully considered over the past several months. The EPA gained crucial insights from the more than 4 million comments that the agency received on the proposal and on notices leading to this final rulemaking, from stakeholders that include state environmental and energy officials, tribal officials, public utility commissioners, system operators, utility and other industry representatives, labor leade rs, public interest advocates, community leaders, and members of the public. As a result, the final emission guidelines reflect changes from the proposal that are directly responsive to the comments received from the many and diverse stakeholders. These fi nal guidelines bear the stamp of the information and input the EPA gleaned from its extensive outreach process and from the comment record. The guidelines reflect thinking and information that states and utilities provided to us about both the best
approac h to establishing CO 2 emission reduction requirements for EGUs and the most effective ways to create true flexibility for states and utilities in meeting these requirements. These final rules also reflect the results of EPA’s robust and ongoing consultatio n with federal, state and regional energy agencies and authorities, to ensure that the actions sources will take to reduce GHG emissions will not compromise electric system reliability or affordability of the U.S. electricity supply.

Comment 5: Commenter s discussed the upgrades needed to infrastructure as a result of the proposed rule.

Commenters stated that the proposed rule will require significant upgrades to the transmission infrastructure, will result in the retirement of legacy baseload generation, will require development of new renewable generation resources, will affect the cost and reliability of the transmission system, and will take time to implement. The commenters explained that existing legacy resources are located near major load centers a nd serve to relieve constraints while maintaining grid reliability and retirement of these resources would result in a loss of reactive power, potentially exceeding thermal transmission limitations and the ability to maintain stable transmission voltages. The commenters suggested that to lessen the impact on reliability, new NGCCs located near retiring resources and significant transmission systems improvements would likely be required which would take at least five years. However, the commenters stated tha t given the competiveness of the current market, retirement decisions will likely be made with only 90 days of notification, impacting reliability and market costs.8 The commenters noted that customer demand for electricity is growing in urban centers and stated that the proposed rule would accelerate the need for transmission projects at the costs of millions of dollars. The commenters also noted the time and costs associated with integrating new infrastructure, citing a $6.9 million dollar renewable energ y transmission line project that took nearly a decade to complete. The commenters stated that although the project improves transmission capacity, it does not provide sufficient capacity to reliably integrate the amount of renewables necessary to achieve t he requirements of the proposed rule and additional transmission improvements will be required if the locations of new installations are not at existing line locations.

Commenters cited a preliminary reliability analysis performed by SPP on the reserve ma rgin which concluded that the rule would have significant reliability impacts, would result in portions of the system so overloaded that cascading outages and voltage collapse would occur, and would result in SPP reserve margins 8.9% below its minimum rese rve margin requirement with a capacity margin deficiency of approximately 4,500 MW by 2020 and even greater impacts to capacity deficiencies and its load serving members by 2024. The commenters detailed the SPP, the power grid model developed, and the assu mptions used to analyze the proposed rule. The report stated that proper implementation of Rule 111(d) would require more comprehensive planning with stakeholders using new tools and metrics as well as 'broader system assessments of the bulk power system a nd natural gas pipeline and storage systems based on environmental constraints'. The commenters stated that the reliability impacts of Rule 111(d) might be at least partially offset by the construction of transmission line upgrades but planning and constru ction of new 345 kV transmission lines can typically take up to 8.5 years, at which time reserve margins and deficiencies would already have occurred.

Response 5: Numerous commenters have suggested that the time allowed states to develop state plans and to come into compliance with the interim deadline of 2020 is inadequate. Although the proposal provided flexibility in the timing with which emission reductions could be made over the course of the 2020

- 2029 period in order to achieve compliance with the emi ssion limitations applicable to that interim period, many commenters perceived the start of the period as too soon and stated that it provided insufficient time for planning and investments necessary for sources to begin complying while maintaining reliabl e electricity supplies.

The EPA has considered these comments and in the final rule has established an interim compliance period of 2022

- 2029 , providing two additional years for planning and investment before the start of compliance . The final rule provide s sufficient time to ensure system reliability and a phase

- in that allows for additional time to complete potential infrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) that might be needed to support more use of existing natural gas

- fired generation, and provides states with increased ability to coordinate actions . EPA is persuaded by comments and by EPA’s own further analysis that this timeframe is appropriate given the nature and magnitude of planning and invest ment activities th at will be necessary. Ad ditionally, this phase

- in increases the flexibility provided to states to address capital investment concerns regarding individual sources when scheduling compliance actions over the course of the interim and final periods. See Section VIII of the preamble for the final rule for a discussion of considerations regarding state plans.9 The S PP study referenced by the commenters used assumptions from the proposal that are superseded by the final rule. Please see the Res ource Adequacy and Reliability technical support document for further discussion of the impact of the final rule on resource adequacy.

Comment 6: Commenters discussed the costs of the proposed rule.

Commenters stated that the NERA consulting group recen tly performed a comprehensive economic analysis of the impacts of the Clean Power Plan on the US energy markets and found that the EPA's proposed rule underestimated the CPP costs by $366 billion over the 15

- year term. The commenters added that EPA's propo sed rule does not adequately account for the cost impacts on the electric markets of additional gas pipeline infrastructure, transmission system upgrades, and other infrastructure investments needed before building blocks 2, 3, and 4 can be implemented.

Commenters stated that EPA's conclusion that the costs to implement the proposed rule are approximately $7

- 9 billion nationwide vastly underestimates the costs of Rule 111(d). The commenters cited various estimates of $12

- $15 billion for Texas alone, and a $42 billion cumulative annual cost increase for electricity and gas impacts from multiple environmental regulations in Texas.

Commenters stated that an ERCOT analysis has concluded that Rule 111(d) would result in increased energy costs for consumers of u p to 20% in 2020, without accounting for the associated costs of transmission upgrades, natural gas supply infrastructure upgrades, procurement of additional ancillary services, energy efficiency investments, capital costs of new capacity, and other costs associated with the retirement or decreased operation of coal

- fired capacity in ERCOT. The commenters noted that the analysis yielded increased usage of natural gas anticipated not only in ERCOT but nationally, accompanied by natural gas prices that could increase beyond the levels anticipated in this modeling analysis.

Commenters stated that: EPA has underestimated employment effects and have therefore underestimated costs and biased the RIA findings towards the proposed rule; that EPA has not sufficientl y completed a social cost analysis because it unsatisfactorily addresses secondary price effects corresponding to the increased opportunity costs of goods produced in manufacturing

intensive states; and that EPA should address the impacts of increased elec tricity costs in producer states such as decreased industry and manufacturing. The commenters also disagree with EPA's assessment "that impacts on retail electricity prices are modest and fall within the range of price variability seen historically in resp onse to changes in factors such as weather and fuel supply."

The Commenters’ analysis suggested a ten percent increase in the real price of electricity would, on average, be associated with a 1.1 percent reduction in state GDP, resulting in a loss of almos t $2 billion to the state of Kentucky and represents a loss of over half of its automotive

- related foreign exports, or eight percent of its total foreign exports. The commenters stated that EPA's analysis should reflect what portion of GDP loss is due to t he proposed rule's effect on market conditions.10 The commenters also stated that EPA should address potential impacts from electricity

- intensive industries like primary metal manufacturing migrating to countries with less stringent environmental regulations if the price of electricity rises, such as economically disadvantaged state and regional economies, increased unemployment, and worsening of the trade deficit. The commenters stated that these impacts would not only diminish the assumed regulatory benefit but also threaten U.S. GDP and national security by lessening U.S. independence within the manufacturing sector.

The commenters also urged EPA to include a "safety net" provision in the final rule to account for these potential significant economic impact s and allow states that have increased exposure to natural gas price volatility to be able to dispatch their remaining coal

- fueled fleet, if doing so will offset rate impacts that exceed ten percent. The commenters stated that this would be done in
concert with the utility regulators and would provide an alternative in the case of weather anomalies, such as the 2014 "Polar Vortex" or severe natural gas pipeline disruptions, which could allow utilities to continue to provide safe and reliable electricity ser vice to their end

- use customers.

Commenters also stated that EPA has significantly underestimated the costs of the Proposed Guidelines because the Building Blocks are based on unreasonable assumptions and will be much more costly to implement than EPA ass umes. The commenters added that the proposed rule is not justified by the purported benefits when those benefits are characterized properly, and that EPA has failed to accurately estimate the impacts of broad disruptions to the economy, energy security, an d the reliability of the U.S. power system.

Commenters noted that the rule has "questionable benefits" and urged EPA to “reconsider imposing such a costly, ineffective regulatory burden on the U.S. electricity system in favor of a more legally defensible, workable approach."

Response 6: Commenters assert ed that the costs of the rulemaking are understated and benefits are ‘questionable’. To support assertions of under statement of costs, commenters reference studies conducted of the proposed CPP by the National Economic Research Associates (NERA) Economic Consulting and an Electric Reliable Council of Texas (ERCOT) analysis. Commenters also contend that EPA does not adequately account for the cost impacts of additional necessary gas pipeline infrastructu re, transmission system upgrades, and other infrastructure investments nor fully consider the economic impacts of the guidelines including secondary market price impacts due to increases in the price of electricity.

The EPA disagrees with commenters’ state ments that the projected costs of the CPP are understated, benefits of CPP are ‘questionable’ and benefits of the guidelines do not justify the costs. The EPA conducted an in

- depth analysis of the benefits, costs, and economic impacts of the guidelines in the Regulatory Impact Analysis (RIA) for the final rulemaking for two illust rative compliance scenarios . As reported in the RIA, the estimated monetized benefits of the CPP far exceed the costs for the scenarios analyzed . Methods and models used to assess the benefits, costs, and economic impacts of the CPP are discussed fully in the RIA. Since states, territories and tribes will design plans to the implement the guidelines and are afforded considerable discretion and flexibilities in planning implementatio n design, the costs and benefits estimated by EPA are illustrative of the costs, benefits and economic impacts that may occur as a11 result of the CPP. Under the final emission guidelines, states are not required to use any of the measures that the EPA deter mines constitute the Best System of Emission Reductions (BSER), or use those measures to the same degree of stringency that the EPA determines is achievable at reasonable cost; rather, CAA section 111(d) allows each state to determine the appropriate combi nation of, and the extent of its reliance on, measures for its state plan, by way of meeting its state

- specific goal. See the preamble section s V and VIII.

EPA used the Integrated Planning Model (IPM) version 5.15 to estimate the illustrative costs, emiss ion reductions and economic impacts of the CPP. IPM is a multi

- regional, dynamic, deterministic linear programming model of the continental U.S. electric power sector. It provides forecasts of least cost capacity expansion, electricity dispatch, and emissi on control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. EPA has used IPM for over two decades to better understand power sector behavior under future business

- as

- usual (i.e., baseline) condi tions and evaluate the economic and emission impacts of prospective environmental policies. The model is designed to reflect electricity markets as accurately as possible. EPA uses the best available information from utilities, industry experts, gas and co al market experts, financial institutions, and government statistics as the basis for the detailed power sector modeling in IPM. The model documentation provides additional information on the assumptions discussed here as well as all other model assumption s and inputs. 2 EPA used IPM to project likely future electricity market conditions with and without the rule. The level of energy efficiency

- driven reductions in electricity demand, and their associated costs, are reported in chapter 3 of the RIA for the i llustrative compliance scenarios analyzed

. Within the IPM analysis reported in the RIA, cost impacts on the electric markets of needed additional gas pipeline infrastructure, transmission system upgrades, and other infrastructure investments as well as cap ital costs of new capacity, and other costs associated with retirement of generating units are considered. Additional demand

- side energy efficiency measures that may be adopted in response to the regulation, and the resulting changes to future demand proje ctions, are also accounted for in the illustrative compliance scenarios. The costs of energy efficiency programs are also incorporated into the cost estimates of the emission guidelines.

The EPA recognizes that reports have been issued by various groups st ating costs vastly exceeding the EPA estimates. The NERA report and the ERCOT analysis contend huge costs estimates, sharp electricity prices increases and zero benefits likely result from the CPP. The underlying assumptions of these studies differ from EP A’s analysis and the results of these reports are inconsistent with EPA’s projections. For example, in one of NERA’s implementation cases that is often cited by commenters, there is an assumption that renewable energy and energy efficiency are not availabl e. EPA believes the combination of all of these assumptions made by these organizations grossly overestimates negative impacts of the CPP. See responses to section 8.6, comment 5 of this response to comment document fo r additional discussion of the studies from various groups

.

2 Detailed information and documentation of EPA’s Base Case using IPM (v5.15), including all the underlying assumptions, data sources, and architecture parameters can be found on EPA’s website at: http://www.epa.gov/airmarkets/powersectormodeling.html

.12 Regarding resource adequacy concerns voiced by commenters, the EPA assessed resource adequacy to address concerns of reliability and finds that adequate reserve margins (excess generating capacity to meet peak demand) and flexibility across the system is expected to alleviate reliability challenges. In addition there is ample time for states, public utility commissions, utilities and grid operators to develop solutions to any local reliability changes. See the Resource Adequacy and Rel iability technical support document for more information on this topic. When the EPA promulgates environmental regulations that affect the utility power sector, as we have done numerous times over the past four decades, we do so with the awareness of the i mportance of the efficient and continuous, uninterrupted operation of the interconnected electricity system in which EGUs participate. We also keep in mind the unique product that this interconnected system provides

– electricity services

– and the critica l role of this sector to the U.S. economy and to the fundamental well

- being of all Americans.

Several commenters’ suggest that significant secondary market impacts will occur. One commenters suggests a ‘safety net’ to avoid such impacts. The implementatio n approaches adopted by the states, and the compliance strategies adopted by affected EGUs, will ultimately drive the magnitude and timing of secondary impacts from changes in the price of electricity, and the demand for inputs by the electricity sector, o n other markets that use and produce these inputs. The flexibility afforded to states in their state plans allows them to encourage compliance methods that include design elements that may mitigate or promote particular impacts based on a state’s prioritie s. For example, states in the Regional Greenhouse Gas Initiative use the revenues from allowance auctions to support direct bill assistance for retail consumers, fund investments in clean energy and electricity demand reduction for business consumers, and support employment in the development of clean and renewable energy technologies. In its recent regulations to limit greenhouse gas emissions, California’s Air Resources Board designated a portion of allowances to be allocated to electric distribution comp anies for the purpose of mitigating electricity rate increases and their associated impacts. Other states may encourage compliance methods by affected EGUs with particularly robust deployment of renewables, energy efficiency, or natural gas to promote manu facturing demand or employment in those sectors. For example, energy efficiency investments may be targeted towards reducing both electricity consumption and natural gas or heating oil consumption, such as weatherization projects. The state plan approach a nd the composition of these programs will influence the effects of compliance with the final rulemaking.

Contrary to commenters’ assertions, EPA does address impacts to secondary markets in Chapter 5 of the RIA that is available in the docket. EPA recogniz es that changes in the price of electricity, natural gas, and coal can impact markets for goods and services produced by sectors that use these energy inputs in the production process. The direction and magnitude of these impacts is influenced by a number of factors. Changes in cost of production may lead to changes in price, quantity produced, and profitability of firms within secondary markets. If regulation results in changes in domestic markets that lead to an increase in imports, increases in productio n in countries with more energy

- intensive production may lead to changes in CO 2 emissions elsewhere. For years when the price of electricity, natural gas, or coal increased, one would expect decreases in production and increases in market prices in sectors for which these commodities are inputs, ceteris paribus. Conversely, for years when prices of these inputs decreased, one would expect increases in production and decreases in market prices within these sectors. Smaller changes in input price changes are assumed to lead to smaller impacts within13 secondary markets. However, a number of factors in addition to the magnitude and sign of the energy price changes, influence the magnitude of the impact on production and market prices for sectors using electricity , natural gas, or coal as inputs to production. These factors are discussed in chapter 5 of the RIA. As previously stated, the flexibility afforded to states in developing their state plans allows them to encourage compliance methods which include design e lements that may mitigate or promote particular impacts based on their priorities.

Comment 7: Commenters discussed cost and reliability concerns.

Commenters stated that Block 1 mandated coal plant retirements will also significantly impact cost and reliability in non

- competitive areas of the country despite regulatory mechanisms in place to stabilize costs of electricity. The commenters stated that RTOs must maintain reliability in accordance with FERC approved tariffs and NERC reliability standards to avoid significant penalties, and that any rules, behavior, pricing, and revenue distribution that need to be changed as a result of Rule 111(d) must b e filed with and approved by FERC.

Commenters relayed reliability concerns from a number of industry stakeholders convened at an August 2014 workshop, including the impacts anticipated from the IPM

- projected retirement of 30% of total installed capacity b y 2020 in one region, the transmission insufficiencies resulting from forced retirements, the exacerbation of reliability issues during weather

- related natural gas curtailment issues, and the costs to purchase electricity to serve customers in the absence of transmission sufficiency. The commenters stated that EPA fails to recognize the significant investment in new capacity and new transmission required, or the time required for planning, approval, permitting and siting time needed to approve and install n ew generation and transmission as a result of the rule. The commenters relayed the notion that EPA must address these concerns in the rule.

Commenters stated that stakeholders convened at an August 2014 workshop also discussed the conflict between Rule 11 1(d) and other EPA regulations. The commenters noted that one system has already spent $120 of the estimated $750 million in its coal plants installing emission controls to comply with MATS, however these plants are assumed by EPA to be shut down by 2020. The stakeholder noted that the plants should not be retired without an opportunity to study the impact of these retirements on reliability; 2) without time to review available alternatives and issue required approvals for new transmission and generation an d 3) without sufficient time to complete the engineering, design and installation of the chosen alternatives, all of which completed before the projected 2020 retirement date. The commenters stated that these conflicts demonstrate EPA's lack of analysis on the real effects that Rule 111(d) will have on grid reliability.
Commenters cited a similar case to the proposed rule where the estimated cost would be $206 million to maintain system reliability under rules that attempt to minimize the use of coal

- fired plants.

Commenters stated that the NODA has introduced more uncertainty into the process because it is no longer clear what a state's goal will be in the final rule, thereby delaying the compliance14 planning process. The commenters discussed the glide pat h text in the NODA that does not prevent the potential for stranded assets, and the use of a 40 year "book life" which does not reflect the actual life of coal

- fired power plants since 65 years is a more realistic time frame. The commenters also stated tha t the estimated 15 year "book life" of retrofits is not realistic given how capital intensive these projects are and suggested that thirty years is a more realistic estimate for remaining life of these projects. The commenters reported concern about rising costs of electricity that will cost ratepayers billions of dollars as new generation resources are built to replace those prematurely retired power plants.

Commenters expressed concern regarding the financial cost of replacement (backup) resources

necessa ry to ensure the reliability of the electric grid. The commenters stated that construction of additional generating capacity to back the intermittent generation along with the additional transmission and infrastructure significantly increases the capital c ost of meeting the Clean Power Plan rules, and operation of higher

- priced resources for reserve adequacy will increase overall system costs. The commenters stated that they want to ensure that EPA has fully captured the capital and operating costs of the a dditional replacement generation and transmission that will be needed to ensure reliability under the Clean Power Plan scenario.

Response 7: The EPA addresses the costs of the emission guidelines in the preamble section V, in section XI of the preamble an d the Regulatory Impact Analysis (RIA) Chapter 3 for illustrative compliance scenarios

, and mitigation measures in the GHG Mitigation Measures TSD . System reliability is discussed in the Resource Adequacy and Reliability Analysis technical support document . States, territories and tribes will design plans to implement the guidelines and allowed flexibilities in the design of their plan. Thus the costs and benefits reported in the RIA by EPA are illustrative of the costs, benefits and economic impacts that may occur as a result of the CPP. States, territories and tribes will design plans that will ensure compliance by electric generating units. Under the final emission guidelines, states are not required to use any of the measures that the EPA determines con stitute the Best System of Emission Reductions (BSER), or use those measures to the same degree of stringency that the EPA determines is achievable at reasonable cost; rather, CAA section 111(d) allows each state to determine the appropriate combination of , and the extent of its reliance on, measures for its state plan, by way of meeting its state

- specific goal. States will be able to address the economic interests of their utilities and ratepayers by using the flexibilities in this final action to: 1) redu ce costs to consumers, minimize stranded assets, and spur private investments in renewable energy and energy efficiency technologies and businesses; and 2) if they choose, work with other states on multi

- state approaches that reflect the regional structure of electricity operating systems that exists in most parts of the country and is critical to ensuring a reliable supply of affordable energy. The final rule gives states the flexibility to implement a broad range of approaches that recognize that the pow er sector is made up of a diverse range of companies of various sizes that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independent power producers, rural cooperatives and municipally

- owned utiliti es, some of which are likely to have more direct access than others to certain types of GHG emission reduction opportunities, but all of which have a wide range of opportunities to achieve reductions or acquire clean generation.

The EPA recognizes the imp ortance of ensuring that the program not undermine electric system reliability. As noted above, the EPA has consulted extensively with federal, regional and state15 energy agencies, utilities and many others about reliability concerns and ways to address the m. Many aspects of the final rule’s design are intended to support electric system reliability. In addition to not requiring reductions before 2022 and to allowing significant flexibility in how the CO 2 emission performance rates or the statewide CO 2 goals are met, EPA is requiring that states demonstrate that they have considered reliability in developing their state plans and have consulted with state utility agencies and/or regional planning authorities.

The final guidelines further provide states with the option of proposing amendments to approved plans in the event that reliability challenges arise that need to be remedied by amending the state plan. The final rule also includes a reliability safety valve to address situations where, because of

an unan ticipated catastrophic event, there is a conflict between the requirements imposed on an affected unit and the maintenance of reliability. The final rule also retains flexibilities presented in the proposal and offers additional opportunities, including op portunities for trading within and between states, and other multi

- state compliance approaches that will further support electric system reliability.

Additionally, see section 5.11 of this document for EPA’s response to the comments relating to stranded a ssets

.

Comment 8: Commenters stated that a further analysis is needed to fully understand the impacts, costs and benefits of the proposed rule.

Commenters stated that EPA has had little meaningful input from FERC on the reliability impacts of Rule 111(d) , which raises reliability concerns. The commenters noted that the GAO report entitled, EPA REGULATIONS AND ELECTRICITY: Update on Agencies' Monitoring Efforts and Coal

- Fueled Generating Unit Retirements is unclear on the exact nature and extent of consult ations with FERC and DOE regarding the proposed rule, however a July 2014 House hearing held by the House Energy and Power Subcommittee of the House Energy and Commerce Committee suggested that the proposed rule may have unintended reliability consequences and that EPA did not seek a formal reliability analysis of Rule 111(d) from FERC. The commenters stated that the lack of a written analysis is clearly insufficient to provide EPA or the public with a thorough and unbiased analysis of the reliability impac ts of Rule 111(d). The commenters stated that EPA has not performed a sufficient analysis of the reliability impacts of Rule 111(d), and must do so prior to issuing any final rule. Lastly the commenters stated that RTOs have not had sufficient time to perf orm a thorough reliability analysis of Rule 111(d) and therefore EPA should withdraw the proposed rule or at a minimum be delayed to allow the appropriate entities, including FERC, NERC and RTOs, to provide meaningful input and analysis on the reliability impacts of the proposed rule or any subsequent rule before it is adopted.

Commenters stated that EPA did not conduct a rigorous cost/benefit analysis in developing the proposed rule, especially considering its 2030 final compliance date, and also failed t o account for the uncertainty of factors affecting the energy landscape nearly two decades into the future. The commenters proposed that a rigorous cost/benefit analysis is vital to understand the intended outcomes, while also considering the social and ec onomic costs of implementation of any rulemaking.16 Commenters discussed several limitations in the RIA, including that EPA did not incorporate the price risk associated with increased reliance on natural gas, did not estimate consumer sensitivity to change s in electricity prices, did not use methods that "permit estimation of economy

- wide effects" (as stated in the RIA), and is "limited to the direct changes in the amount of labor needed in the power, fuels and generating equipment sectors directly influenc ed by compliance with the Guidelines." The commenters stated that omitting price elasticity of demand violates economic principles and biases the RIA findings towards environmental regulation by underestimating the costs of environmental regulation. The co mmenters also stated that by failing to take into account the potential market responsiveness of electric power consumers to changes in electricity prices, EPA is severely underestimating the costs of environmental regulation, particularly for electricity

- intensive manufacturing processes. The commenters further added that cost of moving to greater dependence upon natural gas electricity generation is greatly underestimated and that consumers will bear a greater burden of future electricity price increases due to compliance with this proposal. Lastly, the commenters cited studies that found that higher electricity prices are associated with statistically significant reductions in employment.

Commenters stated that EPA has failed to complete pivotal assessmen ts requested by the Science Committee in 2014.

Commenters stated that EPA must conduct state

- by state cost, infrastructure and permit limitation requirement analyses and determine the impact on reliability, renewable feasibility and early actions by util ities and states.

Commenters expressed concerns in the outcome of components from the BSER, which may encourage unsustainable practices that will neither reduce climate change nor best protect the environment and human health.

Response 8: The EPA disagr ees with the commenters’ assertion that EPA did not conduct a rigorous cost/benefit analysis of the CPP. A comprehensive analysis of the benefits, costs, and economic impacts of the proposed and final CPP was conducted by EPA for illustrative control

scena rios and the results are reported in the final rule preamble Section XI and the Regulatory Impact Analysis (RIA) for the proposal and final guidelines in the docket for the rulemaking. Section V of the preamble reports the cost analysis conducted for the f inal emission guidelines.

With regards to comments concerning electric system reliability, the final emission guidelines reflect the paramount importance of ensuring electric system reliability. EPA engaged in extensive consultation with key agencies resp onsible for reliability, including the Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE), among others and has considered commenters’ concerns. EPA is addressing these concerns in large part by moving the start date of the prog ram from 2020 to 2022 and significantly adjusting the interim goals to avoid an abrupt initial reduction expectation. These changes provide more time for planning, consultation and decision making in the formulation of state plans and in EGUs choice of

com pliance strategies, all within the existing extensive structure of energy planning at the state and regional levels. In addition, the various forms of flexibility retained and enhanced in the final rule, including opportunities for trading within and betwe en states, and other multi

- state compliance approaches, will further support electric system reliability. In addition, EPA is including in the final rule a requirement that each state demonstrate in its state plan submittal that17 it has considered reliabili ty issues in developing its plan, which it can do, for example, by consulting with other state utility agencies and/or regional planning authorities.

EPA recognizes that issues may arise during the implementation of the guidelines that may warrant adjustm ents to a state’s plan in order to maintain electric system reliability. The final guidelines further provide states with the option of proposing amendments to approved plans in the event that unanticipated and significant reliability challenges arise. An d, as a final element of reliability assurance, the rule also provides for a reliability safety valve for individual sources where there is a conflict between the requirements the state plan imposes on a specific affected EGU and the maintenance of electri c system reliability due to an extraordinary event. In addition, the EPA, DOE and FERC have agreed to coordinate efforts to help ensure continued reliable electricity generation and transmission during the implementation of the final rule. The three agenci es have set out a memorandum that reflects their joint understanding of how they will work together to monitor implementation, share information, and to resolve any difficulties that may be encountered.

Contrary to commenters’ assertions, EPA does addres s impacts to secondary markets in Chapter 5 of the RIA that is available in the docket. EPA report changes in electricity prices, coal and natural gas potentially resulting from the CPP. For years when the price of electricity, natural gas, or coal increas ed, one would expect decreases in production and increases in market prices in sectors for which these commodities are inputs, ceteris paribus. Conversely, for years when prices of these inputs decreased, one would expect increases in production and decrea ses in market prices within these sectors. Smaller changes in input price changes are assumed to lead to smaller impacts within secondary markets. However, a number of factors in addition to the magnitude and sign of the energy price changes, influence the magnitude of the impact on production and market prices for sectors using electricity, natural gas, or coal as inputs to production. These factors are discussed in chapter 5 of the RIA. Impacts to secondary markets will be dependent upon a variety of fact ors discussed in the RIA chapter 5. It is important to note that these results are based upon illustrative scenarios of state plans that may be undertaken. As previously stated, the flexibility afforded to states in developing their state plans allows the m to encourage compliance methods which include design elements that may mitigate or promote particular impacts based on their priorities.

In response to the comment concerning economy

- wide modeling, one potential quantitative approach to evaluating the s econdary market impacts is to use a computable general equilibrium (CGE) model. CGE models are able to provide aggregated representations of the whole economy in equilibrium in the baseline and potentially with regulation in place. As such, CGE model may b e able to capture interactions between economic sectors and provide information on changes outside of the directly regulated sector.

When considering the secondary market impacts of a regulation both the effects of the costs, the benefits of improved air quality, and their interaction may be relevant. Therefore, in the Second Prospective Analysis under Section 812 of the Clean Air Act Amendments the EPA incorporated a set of health benefits arising from air quality improvement into the EMPAX CGE model when studying the economy

- wide impacts of the Clean Air Act. While the external Council on Clean Air Compliance Analysis (Council) review of this study stated that inclusion of benefits in an
economy

- wide model “represent[ed] a significant step forward in bene fit

- cost analysis”, the EPA18 recognizes that serious technical challenges remain when attempting to evaluate the benefits and costs of potential regulatory actions using economy

- wide models.

In light of these challenges, the EPA has established a Science A dvisory Board (SAB) panel on
economy

- wide modeling to consider the technical merits and challenges of using this analytical tool to evaluate costs, benefits, and economic impacts in regulatory development. The panel will also be asked to identify potential paths forward for improvements that could address the challenges posed when economy

- wide models are used to evaluate the effects of regulations. The final panel membership was announced in March 2015 and the first of multiple face

- to

- face meetings of the SAB panel has been scheduled for October 2015. The EPA will use the recommendations and advice of this panel as an input into its process for improving benefit

- cost and economic impact analyses used to inform decision

- making at the agency.

Comment 9: Commenters stated that EPA must answer the following questions before the adoption of Rule 111(d): how generators will acquire and pay for replacement capacity for units forced to retire under the rule, how generators will be compensated for stranded costs associated with retired units and whether there will be sufficient natural gas and associated infrastructure available to replace lost coal plant capacity.

Response 9: The EPA considered these factors in developing illustrative scenarios of implementation actions that may be taken as a result of the final CPP. However, States, tribal governments and territories have the responsibility of developing implementation plans for the CPP. States, tribal governments and territories are provided substantial flexib ilities in achieving the emission reduction goals established by EPA. Thus states, tribes and territories may incorporate approaches to minimize the cost of implementation, address reliability concerns and issues involving stranded assets as well as consid er related infrastructure needs associated with implementing the CPP in formulated plans. EPA has established a relatively long planning and implementation period that provides states with substantial flexibility regarding methods and timing of achieving e mission reductions. States may wish to make adjustments to their implementation approaches along the way, or as conditions change, may need to make adjustments to ensure that their plans achieve the CO2 emission performance rates or state CO2 emission goal s as intended. As a result, the agency envisions that the EPA, states and affected EGUs will have an ongoing relationship in the course of implementing this program. The EPA believes that timing flexibility in implementing measures provides significant ben efits that allow states to develop plans that will help achieve a number of goals, including, but not limited to reducing cost, addressing reliability concerns and addressing concerns about stranded assets.

Comment 10: Commenters discussed the impacts of the rule on cooperatives.

Commenters stated that there are significant concerns about the effect of Rule 111(d) on state cooperatives. The commenters stated that EPA fails to address many other issues, including how Rule 111(d) would work for companies w ith power plants located in multiple states and19 operating in different RTOs and how Rule 111(d) will apply to entities that are not currently regulated by state public utility commissions. The commenters explained that coops and municipally

- owned electric utilities are subject to only limited state oversight no regulation of generation assets however these entities are clearly intended to be subject to and are affected by Rule 111(d). The commenters stated that without the requisite state law authority to r egulate these entities, it is unclear how coops and MOUs can be included as part of either a state or federal plan to implement Rule 111(d).
Commenters also stated that the total cost impact to its members of Rule 111(d) to be $2.9 billion including $365 million in stranded costs and $585 million in replacement power costs due to the retirement of four coal units.

Commenters stated that EPA failed to address the significant differences between smaller and larger utilities and the disproportional impacts t hat these compliance measures would have on utilities like cooperatives and municipalities. The commenters stated that smaller utilities have less generation, less diverse fleets, and significantly different customer bases from the standpoint of the mix of industrial, commercial and residential loads. The commenters provided Georgia as an example, where 90% of cooperative customers are residential and many of them are located in rural and impoverished areas, and many of whom will be disproportionally affect ed at a time when many residents are already struggling to pay their power bills.

Response 10: The final guidelines are designed to build on and reinforce progress by states, cities and towns, and companies on a growing variety of sustainable strategies to reduce power sector CO 2 emissions. In their CAA section 111(d) plans, states will be able to rely on, and extend as they choose, programs they may already have created to address the power sector. For example, those states committed to Integrated Resource Planning (IRP) will be able to establish their CO 2 reduction plans within that framework, while states with a more deregulated power sector system will be able to develop CO 2 reduction plans within that specific framework. Each state will have the opportu nity to take advantage of a wide variety of strategies for reducing CO 2 emissions from affected EGUs. The EPA and other federal entities, including the U.S. Department of Energy (DOE), the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Agriculture, among others, are committed to sharing expertise with interested states as they develop and implement their plans.

States will be able to address the economic interests of their utilities and ratepayers by using the flexibilities in the final CPP to: 1) reduce costs to consumers, minimize stranded assets, and spur private investments in renewable energy and energy efficiency technologies and businesses and to address issues relating specifically to cooperatives and municipalities and smal ler utilities; and 2) if they choose, work with other states on multi

- state approaches that reflect the regional structure of electricity operating systems that exists in most parts of the country and is critical to ensuring a reliable supply of affordable energy. The final rule gives states the flexibility to implement a broad range of approaches that recognize that the power sector is made up of a diverse range of companies of various sizes that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independent power producers, rural cooperatives and municipally

- owned utilities, all of which have a wide range of opportunities to comply with this rule.20 Comment 11: Commenters stated that EPA has failed to inc lude the IPM model run information, all of the parsed files, and information on the simulated 2030 runs, which violates Section 317 and Section 307(d)(5).

Response 11: The EPA disagrees with the commenters. IPM model run and parsed files for the proposal a nd final rulemaking are available in docket EPA

- HQ

- OAR

- 2013

- 0602. Detailed information and documentation of EPA’s Base Case using IPM (v5.15), including all the underlying assumptions, data sources, and architecture parameters can be found on EPA’s website at: http://www.epa.gov/airmarkets/powersectormodeling.html

.

Comment 12 : Commenters stated that notwithstanding the improper accounting of costs, there still remains the fact that compliance decisions related to existing assets will not be made until well after state compliance plans are approved. The commenters noted that in the case of multi

state plans with 1

- year extensions at the state level, this approval could come mid

- 2019 or later. The commenters stated that this is completely inconsistent with th e assumption in EPA's modeling that compliance decisions related to both the disposition of existing assets and investment in new assets could be made to effectuate changes in the 2016 generating mix. The commenters noted that a similar argument applies to the construction of new renewable energy efficiency measures and energy efficiency programs.

The commenters stated that the economic selection of unit retirements and new generation in the 2016 model year artificially skews the cost assessment of the pro posal lower by assuming premature economic actions without a firm regulatory basis. Economic compliance decisions cannot be made and will not be made until well after state plans are approved. Due to this fact, in the IPM model assumptions, EPA must assume that any changes in the electric generating mix cannot occur until at least 2020 and then factor in the relevant development timelines for the various generating technologies

. Using this realistic assumption for technology deployment would thereby limit any changes in the electric generation mix until well into next decade, which is reasonable given the timeline for state plan development, regulatory action and compliance deter minations.

Response 12: Regarding the timing of actions taken in EPA’s illustrative compliance analysis, see Chapter 3 of the RIA for discussion of the “perfect foresight” assumption made in the modeling.

The EPA did modify the final guidelines to reflect comments received regarding implementation timing for the CPP. Some of the changes in the final guideline do address implementation of the guidelines. Specifically, EPA provides for a new start date of 2022 for the interim period, a gradual application of the Best System of Emission Reductions (BSER) over the 2022

- 2029 interim period, such that a state has substantial latitude in selecting its own emission reduction “glide path” over that period, and additional changes discussed in the preamble for the fin al rule. See preambl e section I for a discussion of additional changes made to the final rule.21 Th e suite of changes made in the final CPP is the product of compelling information and analysis provided to the EPA via the comment record

– and by the work of, and consultation with, other federal agencies, notably the Federal Energy Regulatory Commission (FERC) and the U.S. Department of Energy (DOE). Earlier this year, FERC conducted a series of technical conferences comprising one national session and three r egional sessions. The information provided by workshop participants echoed much of the material that had been submitted to the comment record for this rulemaking. On May 15, 2015, the FERC Commissioners, drawing upon information highlighted at the technica l conferences, transmitted to the EPA some suggestions for the final rule that are available in the docket. I n addition, states, utilities, and reliability entities asked EPA to ensure adequate time for states, utilities, and grid operators to implement
st rategies to achieve CO 2 reductions. They expressed concern that, in the proposal, at least some states were required to reduce emissions in 2020 to levels that would require abrupt shifts in generation in ways that raised concerns about impacts to electric system reliability, ratepayer bills, and stranded assets. To many commenters, the proposal’s 2020 start date for achieving CO 2 reductions, together with the stringency of the interim CO 2 goal, raised significant reliability implications. In this final rul e, the Agency is addressing these concerns, in part, by adjusting the compliance timeframe from a 10

- year interim period that begins in 2020 to an 8

- year interim period that begins in 2022, and by refining the approach for meeting interim CO 2 emission perf ormance rates (a glide path separated into three steps, 2022

- 2024, 2025

- 2027, and 2028

- 2029, and also achievable “on average” over the 8

- year interim period). In response to the concerns of commenters that the proposal’s 10

- year interim target failed to af ford sufficient flexibility, the final guidelines’ approach will provide states with realistic options for customizing their emission reduction trajectories. Of equal importance, the approach provides more time for planning, consultation and decision makin g in the formulation of state plans and in EGUs’ choices of compliance strategies. Both FERC’s May 15, 2015 letter and the comment record, as well as other information sources, made it clear that providing sufficient time for planning and implementation wa s essential to ensuring electric system reliability.

Comment 1 3: Emission guidelines should consider protection of wildlife and include renewable energy and energy efficiency measures.

Commenters noted that EPA's Proposed Rule, by reducing reliance on coa l burning for power generation, will help protect wildlife by reducing not only the carbon pollution, but also other harmful pollutants like mercury. The commenters asked that EPA work to ensure that the Rule ensures that it achieves the deepest reductions possible by requiring states to use wildlife

friendly renewable energy and energy efficiency and not simply more natural gas burning.

Response 13 : The EPA agrees with these commenters assertion that the emission guidelines should consider protection of th e environment by reducing carbon emissions from fossil fuel fired generating units. The EPA is establishing final emission guidelines for states, U.S. territories, and tribes to follow in developing plans to reduce greenhouse gas emissions from existing f ossil fuel

- fired electric generating units (EGUs). Specifically, the EPA is establishing: 1) CO 2 emission performance rates for two source categories of existing fossil fuel

- fired EGUs, fossil fuel

- fired electric utility steam generating units and stationa ry combustion turbines, and 2) guidelines for the development, submittal and implementation of state plans that implement the22 CO 2 emission performance rates. The final rule will continue progress already underway in the U.S. to reduce CO 2 emissions from the utility power sector. In order to comply with the guidelines, states, U.S. territories and tribes may pursue a myriad of strategies including investment in renewable energy and energy efficiency measures designed to reduce the demand fo r electricity.

8.1 BASELINE EMISSIO NS

Comment 1: Commenters stated that EPA uses 2012 as a baseline year inconsistently which may mean that some or all states' energy generation and energy efficiency is omitted. For example, nuclear generation and hydropower appear to be excluded from the total electricity denominator in the calculation

Response 1: See preamble section VI.D.

Comment 2: Commenters stated that EPA incorrectly uses 2005 as the baseline year which inflates the GHG emissions reductions attributable to the rule because 2005 emissions were higher. The commenters stated that the EPA therefore failed to conduct a proper cost effectiveness calculation.

Response 2: EPA disagrees with this comment. EPA’s analysis of cost

- effectiveness for each of the Building Blocks did not rely on a 2005 baseline. For more information, see section V of the preamble.

Comment 3: Commenters stated that it is well documented that 2012 was not a representative year for electric generation in this country and supp orts using a different baseline for calculating the Mandatory Goals that does not result in goals that are less than the new source performance standard. The commenters also stated that cogeneration coal emission rates would not be not expected to fluctuat e as substantially as EPA's data indicates occurred for the handful of cogeneration facilities that EPA uses to calculate Virginia's Mandatory Goals. The commenters therefore requested that EPA should remove the effect of cogeneration emission rates from a ny baseline data used to calculate carbon emission rates required for Virginia and stated that historic carbon emission rates identified for other coal

- fired EGUs in Virginia (i.e., those that are not cogeneration facilities) appear more reliable for purpo ses of calculating emission rates in Virginia.

Response 3: EPA disagrees with this comment. See preamble section VI.D.23 Comment 4 : Commenters stated that EPA has not clearly defined the baseline for the ESPS RIA, nor has EPA justified whatever the chosen b aseline is. The commenters said the benefits,

co

- benefits and costs that EPA estimates for the proposed regulation are importantly dependent on whatever EPA has defined the baseline to be. The commenters added that absent a clear statement of what the ba seline is for the analysis and why it was chosen, the RIA is incomplete and very difficult for the public to review.

Commenters stated that they disagree with the arguments to the effect that defining the baseline will have relatively little impact on net benefits and argued that the choice of baseline will have a major effect on the estimated net benefits for the rule as well as on costs and benefits individually. The commenters also said that in the ESPS RIA, EPA never clearly states what the baseline as sumptions for 2020, 2025, or 2030 are, nor does the Agency even list the data elements that are addressed in the baseline. The commenters provided an extensive discussion on all the topics that EPA needs to clarify regarding the baseline, and stated that i t would be helpful if EPA were to provide the reader of the RIA with information about the baseline and to explain why the Agency chose to make the specific projections for each that have been included in the baseline. The commenters also said that EPA's f ailure in the RIA to address the baseline violates the requirements laid out in the RIA guidance manuals issued by each, OAQPS, EPA and OMB.

Commenters further stated that IPM modeling used by EPA failed to take into account air quality improvements assoc iated with several rules for which specific implementation controls have yet to be specified and will occur before the proposed guidelines are fully implemented, thus existing rules and not the proposed guidelines will address any public health danger from PM2.5 and O3.

Commenters stated, "EPA appears to have grossly exaggerated the benefits from the proposed rule, particularly because most reductions in carbon dioxide have already occurred since 2005." "EPA should not be claiming benefits that have already been achieved, but rather should be limited to those benefits that are anticipated from the implementation of the proposed rule."

Response 4: EPA disagrees with these comments. See the RIA for a discussion of the baseline utilized in the impacts analysis, and the docket for this rulema king which includes full documentation and modeling outputs for the base case. This baseline appropriately includes projected impacts of federal and state laws and regulations whose provisions were either in effect or enacted and clearly delineated by Mar ch 2015. As discussed in the Chapter 4 of the RIA, benefits were estimated relative to the projected baseline, not 2005.

8.2 EMISSION REDUCTI ONS

Comment 1: Commenters asked about the overall impact of the rule on "restoring the energy balance of earth, s tabilizing the climate system, or preventing further ocean acidification." Commenters stated that "The Proposed Rule does not provide any information about how a 30 percent reduction in emissions from 2005 levels fits with overall national emission reducti ons across all sectors." Commenters further stated that "The Proposed Rule does not provide an24 explicit standard for restoring the energy balance of earth or stabilizing the climate system, or preventing further ocean acidification." According to commenter s, "Nor does the EPA explain how or whether the Proposed Rule is consistent with that standard of protection and will achieve it in concert with other emission reduction plans, rules, efforts."

Response 1: As discussed in the preamble, the requirements of this rule are consistent with section 111 of the Clean Air Act.

Co mment 2 : Commenters stated that the Proposed Rule is not necessary because GHG emissions have decreased and efficiency has improved in the U.S., EPA does not have the legal capacity to impl ement the rule, and EPA has not appreciated the costs that will be incurred by EGUs, industry and manufacturing.

Response 2: EPA disagrees with the comment. The Agency considered costs of the rule, and presents the analysis in Chapter 3 of the RIA.

Co mme nt 3: Commenters stated that EPA's proposal to reduce CO2 will have a minimal impact on global CO2 concentrations. Commenters stated that independent analysis indicates approximately a one percent reduction in global greenhouse gas emissions as a result of the CPP rule, meaning that it will have little real effect toward meeting its stated goal.

Commenters stated that U.S. coal generation accounts for only 4 percent of global GHG emissions, and that Asia consumes more than six times as much coal. The commen ters further stated that the effect of the proposed rule would reduce sea level rise by one one

- hundredth of an inch and reduce the average global temperature increase by less than two one

- hundredths of a degree.

Commenters stated that "final standards that restrict domestic industry without gains that can be realized on their own do not meet the intent of the 1970 CAA". Therefore, the commenters recommended that EPA evaluate whether this proposed rule will noticeably reduce the concentration of carbon d ioxide in the atmosphere, result in measurable improvements to public health and welfare, and is the most reasonable and cost

- efficient mechanism to achieve the desired reductions.

Commenters stated that EPA should not move forward with the proposed rule w ithout addressing what the potential impact of the rule is on global GHG emissions.

Response 3: See preamble Section II. F

.

Comment 4: Commenters stated that EPA's economic justification for the proposed rule relies heavily on the reductions in a Section 108 pollutant (PM), however the provision explicitly25 prohibits regulation of a Section 108 pollutant. The commenters stated that EPA mus t defend the regulation of GHGs based on the benefit of reducing GHGs.

Response 4: In the RIA, the EPA estimated the health co

- benefits that may be produced from reductions of non

- GHG air pollutants resulting from strategies to reduce GHG emissions in the final CPP . However, reductions in these non

- GHG pollutants are not regulated under the CPP and do not inform the BSER analysis underpinning its requirements.

Comment 5: Commenters stated that the CPP does not call for a large enough reduction. Commenters stated that the proposed plan does not put the nation on a trajectory to achieve the 80 percent reduction in emissions by 2050 that scientists say is necessary to avoid the worst impacts of a changing climate.

Commenters stated that more substantial emis sion reductions are readily available from states that have not yet developed and implemented aggressive energy efficiency and renewable energy programs and suggested that these reduction opportunities can be realized cost effectively, while creating jobs, maintaining reliability, and producing economic benefits. Commenters added that some states are demonstrating the feasibility of reducing emissions by 50% and provided New York as an example of a state that has achieved a 40% reduction in emissions since 2005 even though the energy system was already relatively clean. The commenters further stated that the region has grown and continues to grow the regional economy by 7% since 2005, and reinvestment of auction proceeds is contributing to this economic grow th. Analyses predict that over $8 billion and more than 125,000 job

- years will be added to the region's economy as a result of the cap reduction through 2040. The commenters further stated that greater parity in the emission reduction targets will help fac ilitate the development of regional strategies to achieve compliance.

Commenters stated that the U.S. can achieve a 60 percent reduction in emissions relative to 2005 according to UCS analysis. Commenters stated that a prime opportunity exists to rethink a nd retool the rule in order to provide steady progress in greenhouse gas reduction and to allow for the necessary transformation of our electric utility energy sector to provide sustainable solutions for the future.

Commenters stated that an emission reduc tion of 50% by 2030 and 80

- 100% by 2050 is necessary to avoid the catastrophic impacts of climate change and cited NREL 2012, Jacobson and Delucci 2009 & 2011 as support that the U.S. has the technologic and economic capability to meet these goals.

Similar ly, commenters stated that larger emission reductions from the electricity sector should be economically and technically feasible through renewable resource use.

Commenters stated that a stronger standard calling for 35

- 40% emissions reductions would yiel d more benefits through energy efficiency and renewable energy.26 Commenters cited the IPCC 5th report and the related literature to discuss the reductions needed to be considered adequate. The commenters recognized that a reduction of this magnitude requir es global support, but stated that the U.S. must lead the way as the most technologically advanced nation. The commenters listed several impacts of climate change and provided citations.

Response 5: As discussed in section VI of the final rule preamble of the CPP , the requirements of this rule are consistent with section 111 of the Clean Air Act.

Comment 6: Commenters stated that EPA can achieve significant emission reductions in the range of 44 percent below 2005 levels in 2030 at reasonable costs, as de monstrated by the commenters modeling runs. The commenters also stated that when EPA sets final state targets, it should use the corrected formula proposed in the Notice of Data Availability to ensure that the Clean Power Plan fully reflects the potential for emission reductions achievable under the best system of emission reduction. The commenters evaluated the impacts of these state targets based on model runs:

• Under the NODA Dirtiest First case, emissions fell to 1,693 million short tons in 2020, or 36 percent below 2005 and 24 percent below 2012 emissions levels. In 2030, emissions declined further to 1,495 million short tons, or 44 percent below 2005 levels and 33 percent below 2012 levels. Total annual compliance costs in 2020 were $7.7 billion, $4.3 billion in 2025, and $10.6 billion in 2030.

• The NODA Dirtiest First + Min Gen Conversion case showed 1,705 million short tons in 2020, and declined further to 1,485 million short tons in 2030. On an annualized basis, compliance costs in the NODA Dirtiest First + Min Gen Conversion case totaled $6.5 billion in 2020, declined to $4.3 billion in 2025, and rose again to $10.5 billion in 2030.

In 2030, the total benefits of the emission reductions, including reductions of SO2 and CO2, range between $73 and $11 9 billion, with the benefits outweighing the costs by $62 to $108 billion. The commenters also anticipated that compliance costs would be lower if states choose to take a regional approach. In addition to the NODA Dirtiest First cases, Commenters analyzed the state targets based on the Pro Rata Approach, as described in the October 2014 NODA. Under the NODA Pro Rata Approach state targets, outcomes suggest that EPA could achieve 10 percent more emission reductions with 17 percent less in costs than set for th in the proposed standards. The total benefits of the emission reductions, including reductions of SO2 and CO2, range between $61 billion and $96 billion, exceeding the costs of compliance by nearly nine times. The net benefits are valued between $54 and $89 billion in 2030.

Response 6: See preamble section VI .D for a discussion of the final performance rate

- setting equation and computation procedure.27 Comment 7: Commenters suggested the establishment of a registry to "help track the impacts of energy ef ficiency programs and credits from those programs that could be used for 111(d) compliance. The main benefits of such a registry are that it could create a market for energy efficiency and avoided carbon emissions, while also potentially helping states avo id challenges associated with double

- counting. However, such an approach requires determining the appropriate "use cases" for such a registry. EPA should provide additional guidance to states on how best to approach registries and avoiding double counting concerns from an EPA perspective. NASEO, like the other state groups, supports the use of registries."

Response 7: See response to comment 22 in section 5.2.4.

Comment 8: Commenters requested that EPA should assess the reductions that have already been realized directly or indirectly as a result of other federal, state and local laws, rule or requirements to determine whether additional emissions standards are necessary.

Relatedly, commenters discussed the current and future electricity mix in Texas and stated that the state is likely to achieve substantial reductions in emissions even without the proposed rules. The commenters estimated that Texas will achieve a 15 percent reduction in water consumption, a drop in SO2 emissions of one

- third, a 29 percent drop in NOX, a 31 percent drop in the carbon intensity rate and a total CO2 emissions decline by 18 percent between 2012 and 2029 when modeling Option 1.

Commenters stated that much of the air quality benefits that EPA suggested can be delivered through BSER Block 2 switching of dispatch from existing coal to existing natural gas, which already have been delivered in Minnesota. The commenters said in Novemb er 2014, the benefits from Minnesota utility installation of emission control measures were reviewed by the MPCA and Minnesota Department of Health, and that since the air quality improvements already achieved through Minnesota electric generating unit emi ssion reduction measures were recognized, it stated that other emission source categories now need to be the focus for achieving further improvements in Minnesota air quality (e.g. transportation).

Response 8: EPA has appropriately estimated the emissions impacts of the rule, including consideration in the base case of any reductions projected to occur as the result of other federal, state, and local laws. See Chapter 3 of the RIA.

Co mment 9: Commenters supported the proposed rule's emission reductions. Commenters stated that the rules have been crafted in an attempt to achieve significant reductions in carbon dioxide emissions at the least cost possible, allow a very long implementation period, and great flexibility. The commenters urged EPA not to aban don the 1.5 per annum goal for efficiency. Commenters 18761 stated that the proposed rule will allow states to showcase particular strengths and allow the U.S. to shift toward renewables.28 Commenters also supported the proposed rule and stated that the rul e is complementary to Minnesota's emissions reduction goals. The commenters stated that the state expects to generate 28.5% of its electricity using renewable sources by 2030, and up to 40% may be technically feasible.

Similarly, commenters stated that No rth Carolina's Clean Power Plan emissions targets are achievable and that North Carolina is already on track to achieve even greater emission reductions.

Commenters cited DOE which calculated that 20 percent wind energy would reduce carbon emissions by 23 percent by 2030 and reduce carbon dioxide emissions by 550 million metric tons by 2050, as well as save $520 billion in damages due to climate change. The commenters also cited DOE's calculation that the average cost of wind energy has fallen 43 percent o ver the last four years and stated that renewables like wind and solar have no variable fuel costs so that prices can be locked in for two decades or more, protecting electricity consumers from fluctuating prices. The commenters also cited the American Win d Energy Association's 2013 annual market report indicating that the wind industry has invested over $9.5 billion in six states, and that the Solar Energy Industries Association counts over 900 solar companies throughout the value chain in those six states

. Commenters stated that Industrial Energy Efficiency projects result in demand side EE and can achieve low

- cost, verified substantial emission reductions, especially within the context of SEP certification.

Response 9: Thank you for your comments.

Comme nt 10: Commenters discussed the implications of areas where emissions may increase as a result of the rule.

Commenters stated that EPA should undertake further and more detailed analysis to determine what, if any, areas of the country may experience pollut ion increases as acknowledged by the proposal as possible in certain areas. The commenters stated that although existing modeling platforms may not be capable of effectively modeling the response of particular EGUs to different potential state 111(d) plans , "EPA should attempt to characterize and identify the following information where possible:

• The location of potential EGUs that could increase emissions based upon increased utilization of more efficient coal units or lower GHG emitting gas units;

• The po tential magnitude of emissions increases from such units;

• The result of offsetting emissions decreases from EGUs located upwind from or in the same vicinity of the prior universe of EGUs;

• The availability of state and federal clean air authorities to co ntrol or prevent such emissions increases.29 • The availability of state and federal monitoring and reporting authorities available to inform citizens of potential emissions increases; Specific guidance that EPA might provide state and local authorities in the preamble to a final Clean Power Plan to address such emissions increases, if and when they arise."

Commenters provided comments on the two scenarios in which EPA has predicted localized emissions increases could occur as a result of the Clean Power Plan. In the first scenario involving increased dispatch due to unit upgrades, the commenters stated that it is inadequate for EPA to contend that the absence of NAAQS violations would mitigate adverse impacts of local emissions increases. The commenters remarke d that even in attainment areas that currently meet the NAAQS, air quality can be degraded without actual NAAQS violations and that even degradation of air quality in attainment areas can result in serious health impacts. The commenters further stated that in nonattainment areas, even lawfully increasing emissions would result in exacerbation of ongoing health based NAAQS violations. Additionally, the commenters stated that it is possible that "power plant operators undertaking upgrades could increase local emissions and avoid NSR permitting by invoking exemptions (e.g., for routine maintenance, repair or replacement) or exclusions (e.g., the "demand growth" exclusion) in the NSR regulations", and that any unit that escapes NSR permitting may increase its ho urs of operation and resulting emissions significantly. The commenters added that in rare cases where a modified unit does undergo NSR permitting, the unit would be subject to BACT and a local air quality impact analysis would be performed.

In the second scenario involving utilization due to redispatch, commenters stated that EPA writes that states "can take steps to avoid increased utilization," but does not specify those possible steps. The commenters stated that they do not believe states have legal aut hority under current regulations to prevent increased utilization and, by extension, increased local emissions under all circumstances. For example, the commenters noted that power plant operators have the legal right to increase utilization of modified or unmodified EGUs, and therefore increase emissions from these units, as long as they do not avoid NSR permitting or other restrictions through noncompliance. The commenters also stated that EPA says increased utilization "generally would not cause higher p eak concentrations of PM2.5, NOx or ozone around such EGUs than is already occurring, because peak hourly or daily emissions generally would not change, but increased utilization may make periods of relatively high concentrations more frequent." The

commen ters stated that EPA's response to increased utilization is inadequate because increased frequency of high concentrations of PM2.5, NOx and ozone may cause health concerns in localized areas. The commenters noted that NAAQS have averaging periods from one to eight to twenty hours because health exposure risk times vary by pollutant.

Additionally, commenters stated that EPA anticipates that increased utilization is most likely to happen with natural gas plants and that while many pollutants may be reduced i f coal fired plant generation is reduced, potential local health concerns from increased utilization of natural gas plants may still be a concern. The commenters noted that it is also possible that regional improvements from lower coal generation could lea d to net improvement in local air quality and that EPA is right that most new combined cycle natural gas units built within the past two decades are more likely to have modern NOx pollution control than an average coal EGU. The commenters stated that these comparisons are very general and simplistic, and are not adequate responses to legitimate health concerns over the significant increases in NOx emissions that30 could result from increased utilization of natural gas units. The commenters stated that there a re valid concerns about increases in NOx emissions even from natural gas units equipped with BACT because of potential increased utilization to an average of 70 or even higher depending upon reasonable scenarios. The commenters remarked that EPA offers to work with states to address localized increases, but EPA has not identified adequate, available remedies to track and address the possibility of local NOx emissions increases from significantly increased utilization by natural gas units. At a minimum, the commenters suggested that EPA analyze whether any local NOx pollution increases are likely to be offset in the same locales by reductions achieved at upwind plants.

Commenters stated that EPA should consider the strong interaction of CO2, NOx and CO emissi ons from gas turbines into the rulemaking for all three of these emissions so as to seek a more "global" optimum. The commenters added that if CO2 reduction is more highly valued than, for example, CO emissions, then existing fleets will be able to operat e over a broader set of conditions and possibly with lower CO2 emissions by relaxation of CO rules, and that the same applies to NOx.

Commenters stated that the report also found the model that limited actions to improving the efficiency of existing plan ts (i.e. "inside the fence" option), did decrease the annual in CO2 emissions slightly (by 2.2 percent) from the 2020 reference case; however, the likelihood that these more efficient plants would be dispatched more often resulted in an estimated annual 3 percent increase in sulfur dioxide emissions. The commenters said this estimated sulfur dioxide increase actually led to the forecast of an increase in annual premature deaths and heart attacks, using this more limited approach.

Commenters stated that a variety of metrics are of interest to operators of gas turbines, including emissions, efficiency, cost, reliability, and operational flexibility. The commenters said that these different metrics are coupled, and one can envision some optimum combination of design and operating conditions for a given level of technology. The commenters also said this optimum depends upon external weightings, such as regulations on NOx, CO, or CO2, whether a machine runs in baseload or peaking operation, cost of natural gas, and so forth. The commenters added that the need to maintain compliance with compounds such as CO or NOx, may interact with other efficiency or increased gas turbine plant dispatch goals. The commenters described in detail why these interactions occur and the implications for this rulemaking process. The commenters summarized the implications for this rulemaking process as follows:

1. The degree to which a gas turbine can be turned down in power is limited by CO emissions. Thus, CO emission rules will influen ce gas turbine utilization at off

- peak times.

2. NOx emissions and CO2 will increasingly trade off in future high efficiency designs; i.e., low NOx can be achieved at the penalty of increased CO2 and vice

- versa.

3. Gas turbines in certain regions utilize selective catalytic reduction (SCR) units for NOx control, leading to some degradation in efficiency (i.e., increased CO2 emissions) and generation of particulates from ammonia slip. This again points to31 how current NOx regulations influence the efficiency of power plants and their greenhouse gas forcing profiles.

Commenters stated that while gas turbine plant utilization is up, a significant number of plants continue to cycle daily for similar reasons

- the reasons f or this cycling behavior are important to consider in the rule

- making process in order to enable increased utilization of the existing fleet as one of the building blocks for CO2 reduction. The commenters added that CO regulations materially impact the ope rational characteristics and cycling range of low NOx systems and that this points to the need to consider CO2

- CO interactions in that gas turbine plants will be shut down at off

- peak times because they cannot remain in CO compliance. The commenters stated that these comments summarized a more in

- depth article on related topics.

Commenters stated that when establishing emission guidelines, EPA must balance the need for the control of criteria pollutants, which have scientifically demonstrated adverse publi c health effects, with the need for control of CO2, which has not been demonstrated to have adverse effects on public health. The commenters said that the agency must recognize that some criteria pollutant controls may result in higher CO2 emissions.

Com menters stated that precursor emissions will likely increase in some locations and decrease in others due to flexibility in where compliance actions occur which may greatly alter co

- benefit estimates if emissions increases occur in more populated areas tha n where emissions decreases occur. The commenters noted that the RIA does not explore this possibility and has no ability to determine the location of where air quality changes will occur. The commenters recommended that at a minimum, the RIA should provid e maps showing the location of increases and decreases using the locations of existing coal fired plants to identify SO2 changes, and IPM to locate the market region where new capacity would be needed to estimate NOx. The commenters stated that "environmen tal justice advocates would be particularly interested in this aspect of the co

benefits, as they might reveal inequities that can be traced to locations of disadvantaged populations".

Commenters stated that many additional uncertainties may exist due to h ow compliance may be achieved. The commenters further stated that EPA's analysis only considered two alternative implementation strategies even though the array of compliance options is vast and highly uncertain which may vastly change the number of tons o f SO2 that may be reduced under the CPP and the location of where reductions will occur. The commenters noted that these uncertainties have not been considered in the RIA, although they are eminently amenable to analytical evaluation through additional IPM runs, and it is likely that the range of uncertainty on the co

- benefits estimates would be much greater.

Response 10: See section VIII of the preamble. This final rule establishes guidelines for state plans, and each state plan will impact any increases or decreases in generation of specific individual units. Within that context, however, EPA notes that the general shift reflected in the BSER from generation at coal units to generation at existing NGCC and new renewable units will decrease overall emissio ns of CO2 as well as other pollutants. Additionally, note that the guidelines require states to engage with local communities as they develop their plans, and such engagement would provide an opportunity to address the types of concerns raised in these

com ments.32 Comment 11: Commenters cited IPCC's Working group 3 and 2014 synthesis report to provide statistics on the contribution of emissions by the U.S. power sector, and the reductions needed to avoid global temperature changes. The commenters quoted IPCC to explain the challenge associated with meeting the reductions needed to stave off the extreme effects of climate change. The commenters stated that low carbon and renewable energy technologies are needed in addition of energy efficiency to curb climate change impacts.

Response 11: Thank you for your comment.

Comment 12: Commenters stated that the proposed rule and other rules will not spur other countries to take action, especially developing countries. The commenters provided statements from India's ne w environment minister and China's president indicating that carbon emissions will rise for the next one to three decades. Commenters added that even developed countries are missing their GHG reduction targets. Commenters also added that the proposed rule will have drastic impacts, including global competition away from U.S. business.

Similarly, commenters cited CRS and other reference to state that the proposed rule could shift business to more carbon intensive countries, resulting in carbon leakage.

Com menters noted that programs to reduce GHG emissions "must be based on cost

- effective greenhouse gas reductions, and implemented only if coordinated with other major greenhouse
gas

- emitting nations" and in a "reasonable, deliberative, and transparent manner that ensures the United States is not placed at a competitive disadvantage with respect to the rest of the world." Commenters stated that the rule" does not satisfy these criteria."

Commenters added that if the federal government wishes to have a real ef fect on reducing global CO2 emissions, its efforts would clearly be better spent working with countries like China to gain binding commitments to reduce their increasing CO2 emissions rather than attempt to force reductions on the United States electric po wer fleet, which is relatively stabilized compared to countries such as China and India.

Response 12: See preamble section II.G.

Comment 13: Commenters recommended that EPA allow states to develop their own glide paths.

Commenters stated that their plan can achieve a 30 percent reduction from 2005 emission levels over a slightly longer time frame at nearly $4 billion lower than the cost of EPA's proposed rule. Commenters stated that if EPA does not accept the commenters p lan, EPA should eliminate the aggressive interim goals and replace them with a directive to states to develop non

- binding emission reduction milestones that are reasonably achievable and reflect the state's view of the appropriate glide path to the final s tate reduction goal, or it will cost the commenters customers33 nearly $2 billion by 2020. Commenters also recommended that EPA define and limit the emission standards based solely on what is achievable at existing power plants and that states should be give n the flexibility to develop programs that achieve equivalent emission reductions.

Similarly, commenters recommended that EPA allow states to develop and use true glide paths from their 2020 emission levels to the 2030 goals in EPA's final guidance. The co mmenters stated that new gas units would emit substantial amounts of CO2 for an extended period, using up a significant share of the remaining "carbon budget" but CO2 from new power plants is not regulated by Section 111(d), since that section of the Clean Air Act applies to existing, not new, power plants. The commenters provided figures and citations discussing glide paths and stated that "it is readily evident that even a relatively small annual amount of CO2 from new gas plants will, over enough time, e xceed the CO2 emitted by existing plants during the glide

- down period". The commenters stated that adding more CO2 from new, long lived plants and avoiding CO2 from old retiring plants is inefficient and may cause reliability issues, high power prices, and market distortions. Commenters added that adding new plants will limit the ability to meet 2050 carbon emission goals.

Response 13: The final rule includes a new start date of 2022 for the interim period, and a gradual application of the BSER over the 20 22

- 2029 interim period, such that a state has substantial latitude in selecting its own emission reduction “glide path” over that period. See preamble for further discussion.

Comment 14: Commenters stated that EPA has not identified "any mechanism other than the illusory 6% reductions" through which emission reductions may be realized and will potentially create blackouts due to forced utilization reductions at existing plants or reduction of emission rates from existing units.

Response 14: EPA disagrees with this comment. See section V of the preamble.

Comment 15: Multiple commenters recommended that EPA analyze potential emission reductions beyond 2030.

Commenters stated that reductions beyond 2030 must be analyzed to understand the implications of the proposed rule and whether it helps meet target reduction commitments of 83% by 2050.

Commenters similarly stated that EPA needs to analyze the opportunity cost of investing billions in new gas plants which may help meet medium

- term goals but compromise lo ng

- term solutions, compared to other technologies that could help meet long term goals in 2050 and beyond.

Commenters stated that EPA and state implementation plans should extend after 2030 and remarked that cost

- effective energy efficiency programs, hydro power, biomass, and MSW are all options to maintain reliability and cost

- effectiveness of a decarbonized grid. The commenters also supported increased utilization of renewable energy resources.34 Commenters stated that EPA should model emission reductions th rough 2050 and, preferably, through 2080.

Response 15: EPA’s RIAs appropriately examine impacts in a single year of full compliance, which is 2030 for this final rule. For this rule, we are also presenting 2020 and 2025 to provide important information to the public and stakeholders on the gradual approach to compliance.

Comment 16: Commenters stated their skepticism about a net emissions drop with an increase in fracking and recommended that the modeling be available to public. The commenters also stated that the model significantly underrates the potential growth of renewable energy and energy efficiency.

Response 16: EPA disagrees with this comment. See Chapter 3 of the RIA for analysis and discussion of upstream methane emissions. EPA believes assump tions made in the modeling regarding renewable energy and energy efficiency potential are reasonable. See Chapter 3 of the RIA and the GHG Mitigation Measures TSD for additional information. Additionally, all modeling outputs for the proposed and final r ule are available in the public docket for this rulemaking.

Co mment 17: Commenters stated that EPA should treat unreplaced, retired coal units as zero

emitting resources to properly credit emission reductions.

Commenters also stated that the compliance da te should be extended to 2035 to help mitigate the reliability concerns and rate shock, as well as save nearly $4 billion dollars compared to the proposed rule.

Response 17: The EPA disagrees with this comment. See preamble section VIII.B.1.for a discussi on of the revised start date.

Comment 18: Commenters stated that the proposed rule does not comprehensively account for methane leakage from the natural gas lifecycle, including well methane leakages, which will diminish, eliminate or reverse the emission reductions estimated by the proposed rule.

Commenters that the substantial amount of methane leakage that occurs from natural gas system components, including production, storage and transmission in the absence of stricter controls may offset emissions re ductions and lead to EPA overestimating reductions. Commenters noted that recent studies estimate that methane leakage rates from natural gas systems may exceed 2 or 3 percent and event reach up to 10 percent according to a recent American Geophysical Unio n paper. Commenters also provided estimates for methane emissions from various lifecycle stages. The commenters stated that methane leakages will likely erase any climate advantage for natural gas in the power sector over a 100

- year time frame and any esti mated advantage will dissipate as35 gas production increases, particularly as unconventional gas production grows due to higher leakage rates and fugitive emissions occurring during well development.

Commenters stated that the recent Allen study does not ca pture fugitive methane, especially with regard to drilling and older pipelines.

Commenters stated that methane leakage must be properly taken into account.

Commenters disagreed with the following aspects of EPA's analysis:

• choice of 2011 to compare meth ane emissions from coal mines and natural gas systems because it overstates coal emissions and understates natural gas emissions and because natural gas usage increased and coal usage declined in the 2012 base year that EPA used to calculate state goals.

• use of GWP of 25 instead of 34 or 86 as recommended by the IPCC.

• projection of reduced electric consumption after 2020. The commenters stated that if EPA's improbable assumption about declining electric consumption proves wrong, as is likely based on all historical experience, NGCC generation will increase and the supposed GHG benefits of the rule will decline even further.

Commenters also stated that actual methane emissions will be much higher than estimated by EPA and is further underestimated by the us e of an outdated underestimate of global warming potential. The commenters stated that must regulate methane emissions in order to avoid increased GHG emissions from increased natural gas use. The commenters recommended limiting reliance on natural gas to the extent possible.

Commenters listed the following issues with EPA's estimates and conclusions:

1. "The EPA relies mainly on industry

- supplied data for estimating natural

- gas

- related methane emissions, especially for emissions from hydraulic fracturing ope rations. EPA also used an earlier joint study it did with the Gas Research Institute that included field measurements done in 1992.

2. In the one case where the EPA concluded that a set of industry data underestimated emissions from completed hydrofractured w ells, the EPA estimated emissions using the defective industry data and made another estimate without it; but it never used its own, much higher venting estimate.

3. The EPA oil and natural gas technical support document failed even to refer to, much less to evaluate or use, recent independent measurements, including measurements made from aircraft that indicate that leaks from production may be far higher than the val ues used by the EPA. For example, the EPA document did not refer to or use Howarth, Santoro, and Ingraffea 2011, which estimated that leakage and venting rates from conventional and hydrofractured natural gas production wells as well as all downstream emis sions may be much higher than estimated by the EPA. Miller et al. 2013 also conclude that methane emissions associated with both the animal36 husbandry and fossil fuel industries have larger greenhouse gas impacts than indicated by existing inventories. Ther e is also literature that has appeared since the publication of the CPP that provides ample evidence that fugitive methane emissions are larger than officially estimated and that the climate impact may be significant. The final CPP should also review this evidence.

4. The EPA used leak rates averaged over all natural gas production. However, the increase in production that will be required to supply the fuel for the increase in NGCC generation envisaged by the CPP is projected to come from tight gas and shale gas formations. There is a significant difference between the two.

5. The EPA entirely ignored the 20

- year value of the global warming potential of methane. This is critical to the evaluation of threshold effects that may occur on time scales shorter than o ne hundred years, which is the EPA time frame for warming potentials.

6. The EPA did not consider the longer term impact of setting a course of greatly expanded natural gas use in electricity generation up to the year 2030. Specifically, the EPA did not exam ine whether its trajectory of increasing natural gas use is compatible with longer

- term goals for much greater reduction in greenhouse gas emissions."

Similarly, commenters stated that fugitive methane emissions are not appropriately regulated and will inc rease due to the proposed rule.

Commenters referred to methane leakage from unconventional hydraulic fracturing (fracking).

Commenters noted that there are fugitive leaks of methane from drill bit to burner tip.

Response 18: Commenters stated that the pr oposed rule does not comprehensively account for methane leakage from the natural gas lifecycle, including well methane leakages, which will diminish, eliminate or reverse the emission reductions estimated by the proposed rule.

The EPA assessed whether th e net change in upstream methane emissions from natural gas and coal production is likely to be positive or negative and also assessed the potential magnitude of changes relative to CO2 emissions reductions anticipated at power plants. This assessment incl uded CO2 emissions from the flaring of methane, but did not evaluate potential changes in other combustion

- related CO2 emissions, such as emissions associated with drilling, mining, processing, and transportation in the natural gas and coal production sect ors. Also, the EPA did not assess potential changes in other upstream non

- GHG emissions, such as nitrogen oxides, volatile organic compounds, and particulate matter. Table 3A

- 1 of the final RIA presents estimates of the upstream emissions discussed in this analyses for 2013, based on the 2015 U.S. GHG Inventory.

The analysis found that the net upstream methane emissions from natural gas systems and coal mines and CO2 emissions from flaring of methane will likely decrease under the proposed guidelines. Furth ermore, the changes in upstream methane emissions are small relative to the37 changes in direct emissions from power plants. The technical details supporting this analysis can be found in the Appendix to chapter 3 of the proposal and final RIAs.

EPA defined the boundaries of this assessment in order to provide targeted insights into the potential net change in methane emissions from natural gas systems and coal production activities specifically. CO2 emissions from flared methane are included because regulato ry and voluntary programs influence the rate of methane flaring over time and the CO2 remaining after flaring is a methane

- related GHG. Because of the multiple compliance strategies adopted in the illustrative compliance scenarios, a more comprehensive as sessment of upstream GHG emissions would require examination of the broader power sector and related input markets and their potential changes in response to the rule. This analysis would be complex and likely subject to data limitations and substantial un certainties. Rather, EPA chose to limit the scope of this upstream analysis to evaluate the potential for changes in GHG emissions that may be of significant scale relative to the impacts of the rule and for which EPA had previously

- reviewed projection tec hniques.

Commenters stated that EPA should have used a different base year for projections (than 2011 in the proposal). In the proposal, EPA projected upstream methane emissions starting from 2011 because the 2011 GHG Inventory (published in April 2013) wa s the most recent finalized data available at the time that the analysis was undertaken. The upstream methane analysis has been updated to reflect the most recent 2013 U.S. GHG Inventory (published April 2015). This analysis can be found in the appendix to chapter 3 of the final RIA.

Some commenters stated that EPA should have used a different GWP for methane. These topics are addressed in section 8.7.1 of the response to comments document.

Some commenters stated that EPA estimates of methane from natural g as systems are underestimates. Some commenters cited studies showing higher emissions than EPA estimates. EPA’s emissions estimates are based on the best data available at the time of their development. It is EPA’s standard process to update its estimates in the annual Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHG Inventory) when new and improved data are available which would improve emissions calculations. Every year, EPA reviews new data and conducts an extensive annual multi

- phase process in cluding expert review during GHG Inventory development and public review before finalization of the Inventory. In recent years, the natural gas sector has experienced significant growth and changes in industry practices. Emissions profiles from industry practices such as hydraulic fracturing and liquids unloading have changed significantly, and only recently have data become available to improve our understanding of emissions for these sources. EPA’s estimates take into account differences in production emissions for conventional versus unconventional practices. For example, EPA calculates national emissions from gas well completions and workovers with hydraulic fracturing using data on over 25,000 of these events reported to EPA’s Greenhouse Gas Report ing Program (GHGRP). As expected, incorporating newly available data resulted in changes to emissions estimates for the oil and gas sector overall.

EPA is aware of studies calculating methane emissions that differ from EPA’s estimates. EPA continues t o refine the emission estimates in the GHG Inventory to reflect the most robust and up to date information available. Substantial amounts of new information on the oil and gas sector38 will become available in the coming years from a number of channels, inc luding EPA’s GHGRP, and research studies by government, academic, and industry researchers, and industry organizations. In addition, the actions in the White House methane strategy, which target both bottom

- up and top

- down measurement approaches, will imp rove the overall level of confidence in methane emissions data. EPA looks forward to reviewing new information and data as they become available for potential incorporation in the GHG Inventory.

EPA does not officially calculate a leak rate for the natur al gas industry. Through our annual, national

- level Inventory of U.S. Greenhouse Gas Emissions and Sinks, we provide an estimate of total greenhouse gas emissions from the oil and natural gas sector. This estimate includes process emissions like vented an d fugitive methane emissions from over 100 activities and equipment types that generate emissions in the natural gas industry, from drilling and production, through processing and transmission, to distribution. Others have developed leakage rate estimates using emissions estimates from EPA's national GHG Inventory, along with data from other sources, such as oil or gas production data from EIA.

Comment 19: Commenters stated that emissions may increase as a result of the proposed rule.

Commenters stated that facilities may choose to meet the goals by shifting to onsite generation, which is not subject to the proposed rule but may increase emissions overall. The commenters stated that it is unclear how it will impact state rate goals, but the proposed rule does not provide a means of accounting for "off

- grid" emissions.

Similarly, commenters stated that most of the lost baseload capacity will be replaced by new fossil fuel capacity that will not be regulated.

Commenters stated that local energy users could move to diesel, which may increase emissions from the current fuel mix. Commenters also stated that if Alaskan residents may burn more wood or use diesel as affordable alternatives to increased energy prices, which could exacerbate PM2.5.

Commenters sta ted that "solutions" to reduce global warming pollution must not create or exacerbate other environmental and social problems. The commenters said that CPP's inclusion of nuclear power, "waste

- to

- energy", carbon capture and sequestration, biomass incinera tion and other dirty fuels fails to acknowledge adverse environmental and public health impacts. The commenters said these technologies poison our land, water and public health and cannot be considered clean energy. The commenters added that guidance for complying with the Clean Power Plan should not promote these false solutions to climate change.

Response 19: EPA’s analysis of two illustrative compliance scenarios in the RIA projects an overall emissions decrease as a result of the rule, and an increase in new renewable generation. See Chapter 3 of the RIA.39 Comment 20 : Commenters stated that the proposed rule does not account for the potential for increased coal exports as a result of the rule. Commenters stated that EPA must attempt to address the pot ential for coal exports in its regulatory analysis since the exports would offset the expected reductions from methane emitted from coal mines.

Commenters stated that EPA has failed to consider the potential international consequences of the decline in dom estic coal prices, which may lead to increased exports and increased usage of coal internationally, further accelerating the already rapidly growing CO2 emissions in other countries.

Commenters stated that we should consider our fossil fuel exports, and asked if those exports are undermining our efforts to reduce greenhouse emissions here at home.

Res ponse 20: EPA analysis projects a minor decrease to coal prices under the two illustrative compliance scenarios analyzed, and does not expect a significant increase in coal exports as a result of this rule. See Chapter 3 of the RIA.

Comment 21: Commenters stated that EPA has incorrectly evaluated the amount of emission reductions. Commenters stated that EPA uses incorrect values for the GWP of fossil methan e; underestimates methane leakage rates especially for unconventional natural gas extraction; overestimates the carbon reductions Block 2 of the Proposed Rule can achieve; incorrectly estimates achievable emission reductions from Block 1 due to excluding n atural gas plants and some coal plants from heat rate improvements; and severely constrains its target selection procedure to drive down emission reductions below what business as usual would otherwise achieve. Similarly, commenters stated that increased u se of natural gas will not result in up to 40% emissions reductions.

Response 21: On EPA’s estimates of methane emissions from natural gas systems, please see response to comment 18 in section 8.2 of this response to comments

. On the GWP for methane, please see section 8.7.1 of this response to comments

. Regarding the building blocks, EPA disagrees with these comments. See section V of the preamble and the GHG Mitigation Measures TSD. Regarding projected emissions reductions under the rule, see Chap ter 3 of the RIA.

Comment 22: Commenters stated that EPA may have underestimated the emission reductions that can be achieved through increased natural gas use in the power sector, including through (1) onsite emission reductions and (2) redispatch strat egies.

Similarly, commenters stated that the proposed rule accurately recognizes the low

- carbon attributes of natural gas generation. The commenters cited an October 2014 EIA report which indicated that carbon emissions have declined in part due to increa sed natural gas usage.40 Response 22: EPA estimates of the reduction potential of Building Blocks 1 and 2 are reasonable. See Section V of the preamble and the GHG Mitigation Measures TSD.

Comment 23: Commenters stated that the proposed rule does not accou nt for bioenergy and standalone biomass power plant emissions, therefore does not properly estimate emission reductions. The commenters cited EPA research and further stated that while biomass emissions can be offset over time, reductions can take decades. The commenters stated that EPA must require rigorous and protective science

- based carbon accounting for all bioenergy proposed by states as they seek to meet EPA's targets under the GHG rule.

Commenters also stated concern that coal fired plants may be co nverted to biomass, despite SAB modeling that indicates significant emissions from biomass. The commenters stated that EPA is still working on an accounting framework for bioenergy, making it difficult for states to account for bioenergy in their plans. Th e commenters suggested that setting a cap for the maximum amount of carbon emissions that can be emitted by 2020 and 2030 will address net carbon accounting for bioenergy and allow states to evaluate the relative impact of each energy source.

Response 23: A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I.2.c and Section VIII.K.1 of the preamble.

A discussion regarding the current status of the development of the revised Framework and how inform ation from the revised Framework and the related peer review processes could be used to inform how states and EPA assess biogenic CO2 can be found in Section VIII.I.2.c and Section VIII.K.1. For more information regarding the Framework, see: http://epa.gov /climatechange/ghgemissions/biogenic

- emissions.html

Co mment 24: Commenters stated that the base year selected by EPA leads to a misleading demonstration of emissions reduction because 2005 represents emissions peaks and allows the rule to take credit for reductions that occurred primarily due to economic decline. Commenters further stated that the emission reduction goals falls short of the Copenhagen accord for 2020 and 2030, however neither target is adequate to avoid the worst impacts of climate change. The commenters added that any primary reliance on fossil fuels, including natural gas, will not allow reductions to be sustained with future economic and population growth.

Commenters stated that EPA claims mistakenly credit for emissions reductions by us ing 2005 as a base year, because emission reduction activities in building blocks 2, 3, and 4 would occur without the rule, and because RPS system shifts would occur without the rule. The commenters also stated that the proposed rule does not account for t he decreased natural gas use that is predicted 10 years after natural gas infrastructure is expanded, for increased foreign exports of natural gas, or for transportation and mobile source GHG emissions.

The commenters further stated that the lifecycle emi ssion impacts of rapid expansion of gas pipelines as well as lifecycle emissions from renewable energy are not considered. The commenters cited photovoltaic and wind lifecycle emissions from 0.07

- 0.18 pounds CO2 per41 kWhr and 0.02

- 0.04 pounds CO2 per kWhr, respectively. Lastly, the commenters stated that EPA uses the Climate Action Report methodology, but recommended the use of a different approach in comments to FERC, and provided no explanation of the particular methodology.

Response 24: The RIA includes a comparison of emissions under the two illustrative compliance scenarios analyzed against both 2005 and future projected base case levels. The EPA appropriately estimated costs and benefits of this rule relative to a future base case, not a 2005 baseline. See Chapter 3 of the RIA. Additionally, see response to comment 18 regarding lifecycle emissions related to gas.

Comment 25: Commenters stated that nuclear emits twice as much carbon emissions as wind and solar, and that the costs of nuclear accidents and cleanup are not addressed.

Response 25: The EPA is not finalizing preservation of generation from existing nuclear capacity as a component of the BSER. See preamble section V.A.3.

Comment 26: Commenters in this summary discussed the effects of propos ed fuel switching to natural gas, and the risks methane emissions associated with natural gas processes pose for human health.

Commenters stated that EPA should evaluate the increase in emissions caused by the increased use of natural gas under the Propose d Rule. The commenters said that an increase in natural gas usage from re

- dispatch may increase NOx, VOC and methane emissions from upstream oil and gas operations in areas that are at risk for ozone nonattainment and that should these areas become design ated as nonattainment, new constraints would be necessary regarding production. The commenters said that all of New Mexico's NGCC facilities are located in areas at risk for ozone nonattainment. The commenters said that increased usage of both oil and gas facilities and NGCC facilities will increase emissions, leading to additional permitting requirements, which could lead to additional economic burdens and additional costs for controls.

Commenters provided concerns in regards to developing oil and gas in t he Balcan (tribal territory), which are expected to impact air quality. The commenters stated that the expanded use of natural gas will negate 13 year effort by Native Energy Inc. to reduce its emissions.

Commenters stated that EPA is touting health benefits associated with the decrease of coal use, but that is not taking into account the growing public health impacts from natural gas exploitation.

Commenters stated that we should transition into solar, wind and geothermal. The commenters said that na tural gas technology releases methane and other toxic substances such as radon and benzene into the environment.

Commenters stated that oil and gas sites are the biggest industrial source of methane, and that is 80 times more powerful as a greenhouse gas than carbon dioxide over a 20

- year time frame. The42 commenters said that methane accounted for about 14% of US climate pollution in 2013, and according to the EPA's greenhouse gas inventory, this value is expected to grow. The commenters said that Colorado is currently the only state that has adopted rules limiting methane emissions from oil and gas operations, and that Seven Northeastern states (New York, Connecticut, Delaware, Maryland, Rhode Island, Vermont, and Massachusetts) are intending to sue EPA for failure to regulate methane emissions under Section 111 of the Clean Air Act. The commenters asked for clarification in whether Obama Administration's new actions to combat methane emissions will stop the Northeast states legal threats.

Commenters stated that a sharp increase in natural gas consumption could result in much higher methane emissions from leaks in the transmission and distribution network, which could increase total CO2 equivalent (CO2e) emissions. The commenters said that methane is about 25 times as potent as CO2 (1 ton of methane is equivalent to 25 tons of CO2), so these leaks represent a major concern for the viability of CO2 reductions from fuel switching. The commenters added that using EPA's estimate of a 2% methane leakage rate, the f uel switching scenario would result in 14.7z million tons of additional CO2e above the BAU scenario. The commenters said that recent studies have questioned the validity of EPA's estimates and suggested that much higher leakage rates are actually occurring . The commenters stated that using a 10% leakage rate adds 92.5 million tons of CO2e under the fuel switching scenario compared to 18.7 million tons under the 30% RPS scenario, and that this pushes the 2030 carbon intensity from 1,095 lb/MWh to 1,605 lb/MW h under the fuel switching scenario, and increases the marginal abatement cost from $30/ton to $84/ton. The commenters also said that the 30% RPS scenario sees a much smaller increase in carbon intensity, from 1,199 lb/MWh to 1,212 lb/MWh and marginal abat ement cost of $35/ton; and stated that the 30% RPS is a more effective mitigation strategy when fugitive methane emissions are considered.

Commenters stated that methane emissions may be higher than the EPA estimates. The commenters said that a series of r esearch papers continue to document vulnerability with a U.S. policy that looks to substitute coal

- burning plants with natural gas generation plants. The commenters cited a report published in the Proceedings of the National Academy of Sciences that found much higher levels of methane leakage from oil and gas operations and agriculture than estimates from the Environmental Protection Agency (EPA) and international monitoring agencies, which were found to be 1.5 times to 1.7 times higher than previous estima tes by the international Emissions Database for Global Atmospheric Research. The commenters said that the research work for this study was done by a large, multi

- institutional team of researchers taking what is termed a top down approach of atmospheric mea surements. The commenters said that this study published in December 2013 used both observations and modeling to determine methane emissions.

Commenters also stated that EPA's bottom up approach of monitoring emissions (or methane leaks) at the source site was also criticized by the Office of the U.S. Inspector General in a report issued in July of 2014. The commenters added that currently, the EPA uses a voluntary program, Natural Gas Star, to address methane leaks from pipeline infrastructure. The commen ters also stated that in 2012, there were more than 1.2 million miles of gas distribution mains with an estimated 32,000 miles of mains that are cast iron or wrought iron and more than 61,000 miles of unprotected steel mains, and that leaks are most likely from older pipelines, some over 100 years43 old. The commenters said that methane leaks can occur at all points across the supply chain from hydraulic fracturing drilling sites to liquid natural gas conversion and shipping facilities.

Commenters stated tha t shale oil drilling sites methane leakages are higher than once thought, and cited a study published in the Scientific Journal, Earth's Future, which found that two shale oil drilling basins leaked around 10 percent of the natural gas they produce, during the study period of 2006

- 2011. The commenters said that this is significant because study sites (North Dakota Bakken Shale and Eagle Ford East Texas) produced 485 million cubic feet per day of gas average during the month of September 2011 and 1,232 milli on cubic feet of gas per day in 2011, respectively. The commenters said the methane gas leaks likely come from wellheads, valves, tanks, pipes, processing plants and other areas in the energy production supply chain. The commenters stated that scientists s ay that a methane leakage about 3.2 percent may negate the natural gas fuel's benefit to reducing electricity power plan greenhouse gas emissions, and that these findings mean that natural gas as a fuel sources for electricity power plants is just as bad a s coal. The commenters said that the authors of the study say they were conservative in providing a range of leakage readings over time, but even the low range readings far exceed the leakage rates used by the Environmental Protection Agency (EPA) of 1.2 p ercent for these sources.4

Commenters stated that the rule will result in increased natural gas production and this will increase methane releases and negative impacts to health, water resources and air quality during the increased development of gas rese rves. The commenters said that even if RE successfully cuts gas demand in the US that natural gas production won't diminish given the lack of export controls.

Commenters stated that EPA must support accurate measurements of total future methane emissions a nd the whole life

- cycle process, as well as the total external costs of all pollution from increased natural gas and other fossil fuel production and consumption. Commenters stated that encourage the EPA to address the issue of methane, the other major con tributor to current climate crisis.

Response 26: On EPA’s estimates of methane from natural gas systems, and on recent studies on methane from natural gas systems, please see response to comment 18 in section 8.2 of this response to comments

. Additionally , see RIA Appendix 3A.

Comment 27: The commenters said EPA cannot ascribe positive value to the decreases in combustion

- related emissions of PM 2.5 and ozone precursors from EGUs while failing to estimate negative value also for increases in precursor emis sions from other source types. The commenters said that use of each of the four building blocks will result in at least some partly offsetting increases in precursor emissions, mostly from sources other than EGUs, and stated that EPA should account the imp acts of these emissions increases in the benefits analysis. The commenters provided examples of how the use of each of the four building blocks can lead directly to increases in precursor emissions related to deconstruction, construction and manufacturing associated with each block. The commenters also added that as the proposed regulation leads to changes in the relative prices of coal, natural gas and other sources of energy,44 usage of these and other fuels will change, which further likely increases emiss ions from sources other than EGUs.

Response 27: EPA disagrees with this comment. The RIA appropriately estimates the cost and benefits of compliance with this rule. See chapter 3 for estimated impacts on emissions and fuel prices, and chapter 4 for estim ated benefits.

8.3 ENDANGERED SPECI ES ACT

Comment 1: Commenters stated that EPA does not take into consideration the economic, temporal or other impacts that ESA regulations may have on existing and proposed energy projects, including transmission, distribution and right of way maintenance.

Commenters discu ssed proposed ESA rules and recent findings and stated that they may affect existing or proposed renewable energy sites, even if there were existing safe harbor agreements, habitat conservation plans, or candidate conservation agreements. Commenters added that the Proposed Rule does not factor in the impact of the other legal issues, such as the Migratory Bird Treaty Act and American Bald and Gold Eagle Protection Act on renewable energy targets. Commenters discussed potential difficulties associated with e nergy projects in Nevada and Wyoming because of existing and future protections for the sage grouse as an example. Commenters stated EPA must consider these potential impacts in its evaluation of a state's renewable energy potential.

Similarly, commenters stated that Great Plains states are within the migratory corridor for several endangered species which may limit the ability to complete infrastructure upgrades or require lengthy consultations and permitting.

Commenters recommended that EPA consult on t his issue with the Department of the Interior, USFWS, and the United States Forest Service to create streamlined processes, including review under the NEPA, and provide, in particular, additional guidance for the western states with greater sage grouse hab itat. Commenters added that EPA takes no consideration of the need for utilities to conduct full NEPA studies.

Commenters discussed the whooping crane migration corridor and the potential Federal action delays and increased costs with any transmission line or other infrastructure projects that may be needed. The commenters also discussed the sage grouse habitat and issues with wind development.

Commenters stated that much of the land in Oklahoma and New Mexico cannot be readily developed because it has be en designated critical habitat for the lesser prairie chicken, American burying beetle and other species.

Commenters stated that the renewable potential identified in the Alternative RE approach is primarily derived from a 2012 NREL report that does not e xclude critical habitats of roughly 740 threatened and endangered species, which will have a significant impact on the potential45 renewable generation areas available. The commenters stated that failure to adjust the goal setting methodology would result in arbitrarily low emission rate goals.

Similarly, commenters stated that a build

- out of wind generation on EPA's proposed scale would directly conflict with Wyoming's sage grouse efforts and put western state economies at risk.

Commenters stated that the E PA must also consider the impacts of other federal regulations involving listed and threatened species, species of special concern, migratory birds, eagles and other similar regulations and requirements when making assumptions about timelines, re

dispatch and particularly expansion of renewable energy generation. The commenters stated that state and federal conservation plans will impact development and siting of wind farms, electric generating stations, gas and electric transmission lines, and all associat ed permanent and temporary infrastructure required to construct these facilities. According to the commenters, the CPP, and the associated assumptions involving re

- dispatch and renewables integration may affect whether or not sage grouse, as one example, a re listed as endangered in Montana and other
western states

.

Res ponse 1: The final rule does not affect existing requirements that apply under other federal statutes or regulations addressing listed threatened or endangered species or other species. The
ap plication of these other federal statutes and regulations is generally on a site

- specific basis and is thus difficult to include in setting national emissions standards. D ue to the variability in the applicability of such statutes, the lack of available si te

- specific data, and the difficulty in assessing these values at a national level in a meaningful way, we are unable to quantify these impacts in the final rule. The EPA has also explained in section s VIII and XI.B of the final r ule preamble that the CPP provides states with considerable implementation flexibility, thus further decreasing the likelihood that any species

- impacting activity will occur in any particular location. For example, the NREL study that the EPA is using to calculate BSER has a much higher level of renewable development potential than the EPA is including in our building block 3 determination. Given this high level of potential renewable development, as well as the many flexible compliance options included in the final rule, we believ e that affected EGUs can meet BSER requirements, while avoiding the most environmentally sensitive areas that are subject to other federal statutes.

Co mment 2: Commenters stated that EPA is required to consult with wildlife agencies on the effects to ESA

- listed species and their critical habitat caused by the proposed rule's incorporation of wind and solar energy into the agency's BSER of carbon dioxide for fossi l

- fuel

- fired power plants.

The commenters stated that the proposed rule is a discretionary agency action for purposes of the ESA's consultation regulations and that the agency's action "may affect" a listed species or its critical habitat, indirectly or d irectly, and that the effects may be "caused by the proposed action...later in time, but still are reasonably certain to occur." The commenters added that contrary to EPA's assertion that the effects are not sufficiently certain, the threshold "for an
agen cy action to trigger consultation ... is low," and "[a]ny possible effect, whether beneficial, benign, adverse, or of an undetermined character, triggers the formal consultation requirement"46 (Western Watersheds Project v. Kraayenbrink, 632 F.3d 472, 496). The commenters also point to references within the proposed rule as well as court cases, such as Defenders of Wildlife v. EPA (420 F.3d at 961

- 62), to support their view that it is reasonably foreseeable that EPA's rule encourages and will lead to expanded wind and solar energy generation, which in turn "may affect" listed species and their critical habitat.

Commenters also stated that EPA inaccurately uses American Trucking Association v. EPA to support its conclusion of "no consultation required" because American Trucking's interpretation of the Regulatory Flexibility Act's scope is based on that Act's limitation to agency actions that directly affect or regulate small entities. The commenters stated that in contrast, the ESA's consultation provision does not contain any such limitation and expressly takes account of direct and indirect effects that "may affect listed species or critical habitat". The commenters also provided citations and examples of the direct and indirect impacts that wind and solar ene rgy can have on ESA

- protected species, such as collision deaths and habitat fragmentation.

Commenters added that EPA cannot avoid its consultation obligations, merely because the EPA makes states responsible for drafting and implementing plans, mirroring t he EPA's standards of performance and guidelines, to reduce carbon dioxide emissions. Rather, according to the Commenters, it is clear that an agency action's direct or indirect effects on a listed species or its critical habitat must be considered under S ection 7 of the ESA. 50 C.F.R. Section 402.02. The commenters stated there is no question that this Proposed Rule is an agency action with direct and/or indirect effects on listed species or their critical habitat, because it encourages the development of wind and solar power. See Florida Kay Deer v. Paulison, 522 F.3d 1133, 1143

- 44 (11th Cir. 2011) (determining that an agency's administration of a statute, which encourages development may jeopardize listed species, thus requiring Section 7 consultation). T herefore, the commenters contended the EPA should withdraw its Proposed Rule and undergo formal consultation under Section 7 of the ESA.

Response 2: See section XI.B of the final rule preamble of the CPP for the EPA’s response to this comment.

Comment 3 : Commenters stated that the capacity of renewable energy generation zones in areas where conflicts with habitats are lowest are vast within Nevada, and the state can meet carbon reduction goals in these areas without conflicting with endangered species an d other federal laws.

Response 3 : The EPA acknowledges the comment.

8.4 ENERGY IMPACTS

Comment 1: Commenters stated that EPA should remove the interim goals from the proposed rule and rely on States to make the progress needed to achieve the 2030 emissio ns targets. The commenters listed reliability concerns detailed in the 2014 NERC Reliability Report as reasons47 to remove the interim goals, and recommended that EPA account for the impact of existing and anticipated domestic energy supply policies on imple mentation of the rule in order to maintain reliable affordable energy that allows a competitive advantage and to avoid dampening the continued expansion of the chemical industry.

Commenters stated that EPA must reconsider the decision to impose interim goa ls given that it is those goals that are driving the CPP related retirements and increasing the potential for blackouts as well as the harm to human health and welfare that blackouts cause. The commenters stated that reductions associated with building blo cks 1 and 2 cannot be achieved so quickly, nor can RE and EE/DR measures be implemented in significant amounts until after 2020. The commenters cited NERC's statements regarding the reliability challenges posed by the proposed interim goals as well as NERC 's concerns with Building Block 2. The commenters also cited MISO's proposal to eliminate interim goals and provided two examples of impacts from grid reliability incidents. The commenters recommended that progress towards the final goal can be assured by requiring states to identify "objective criteria" demonstrating that progress is being made based on what is reliably and cost

- effectively achievable in the state.

Commenters stated that the interim compliance period should be eliminated because it is like ly to result in reliability problems and uneconomic compliance decisions due to the short period of time available to develop and implement compliance plans. The commenters further stated that it is possible that actions required to meet the interim compl iance targets would exceed what is required to meet the final 2030 targets. The commenters added that from an overall power system perspective, that almost a third of the coal

- fired generating capacity available to meet demand in 2010 could be shut down b y 2020. The commenters stated that the interim compliance period would deprive states and utilities of the ability to effectively manage this transition in a way that ensures reliability and mitigates cost impacts.

Commenters identified several passages in NERC's 2014 report supporting the commenters’ position. The commenters stated that it is clear from the NERC report that implementation of the Proposed Guidelines could present reliability problems for the bulk power system, especially given the extremel y compressed implementation schedule. The commenters continued that it is prudent to expect that the retention of the interim compliance period, as proposed, will create reliability problems and the prudent path forward, would be to eliminate the interim compliance period to provide the time needed to meet the 2030 goals.

Commenters also noted MISO's concerns in a letter submitted to EPA regarding the timeline for reliable compliance: 1) that the interim emissions performance requirements create an untenab le and infeasible timeline for reliable compliance, and would cause MISO member companies to make decisions on a severely truncated timeline, and 2) urges EPA to remove the 2020

- 2029 interim emission performance period and levels from the final rule to all ow sufficient time for reliable and efficient implementation of compliance strategies

Commenters stated that there are options for addressing reliability issues created by the 2020 interim standards: 1)eliminate interim standards altogether and allow state s to develop a glide path where as long as the state can demonstrate reasonable further progress toward the final 2030 goal, the state will be in compliance; and 2) incorporation of a dispatch price adder for EGU48 CO2 emissions by a state could provide an o ptional best efforts "safe harbor" approach to establishing the glide path.

Commenters highlighted issues on the gas demand and what that could mean for the secondary impacts for the home heating costs in Colorado Springs. The commenters asked the EPA

c onsider a less stringent interim goal since the interim goal is virtually identical to the final goal. The commenters stated that this means customers will experience an immediate and significant rate impact in 2020, which, if the natural gas market respo nds with increased prices, customers will get it both ways, both on their power bill and their natural gas bill, their heating bill.

Commenters stated they would like to see a safety valve included to allow for unexpected rate or reliability impacts becaus e 90 years in the natural gas markets have taught us that the natural gas markets are not predictable, and some sort of financial mechanism, a safety valve or an off ramp, needs to be provided if natural gas prices exceed a certain threshold.

Commenters st ated that the interim targets will force many generators into early retirement at a time when the generation fleet is struggling to maintain reliable service and that the interim emission reduction goals should be eliminated to allow a more orderly, cost

- e ffective and reliable transition to a lower carbon emitting power sector. As evidence, the commenters provided statistics of the effects of the 2013

- 2014 extreme cold in the mid

- Atlantic region, the effect of MATS and the proposed rule on retirements, and economic impacts. The commenters noted the importance of ensuring a reliable electric grid cannot be overstated.

Response 1: The final rule features overall flexibility, a long planning and implementation horizon, and the widest possible range of options for states and affected EGUs to achieve the CO2 emissions goal. This design reflects, among other things, the EPA’s commitment to ensuring that the final rule does not interfere with the industry’s ability to maintain the reliability of the nation’s elect ricity supply. Comments from state, regional and federal reliability entities, power companies and others, as well as consultation with the Department of Energy (DOE) and Federal Energy Regulatory Commission (FERC), helped inform a number of changes made i n this final rule to address reliability. Please see Chapter VIII.G.2 for a full discussion of electric reliability and the Clean Power Plan.

Comment 2 : Commenters urged EPA to withdraw this proposal and consider a more common

sense approach that will be a true all

- of

- the

- above energy strategy because of the prospect of threatening American jobs by nearly eliminating coal from the generation mix.

Commenters urged EPA to reconsider the proposal outlined in its Clean Power Plan and stated rather than pursui ng a balanced approach that could reduce emissions while also ensuring consumers and business will continue to have access to affordable and reliable energy as the economy continues to recover from the worst recession in generations, EPA's Clean Power Plan risks American energy affordability and reliability through sweeping rules that exceed the agency's legal authority.49 Commenters stated that EPA should withdraw its proposed existing source performance standards (ESPS) because it will threaten grid reliabi lity. The commenters stated further that the SPP warns of adverse impacts the CPP will impose on America's bulk electric system and unless the proposed CPP is modified significantly, there will be detrimental impacts on the reliable operation of the bulk electric system in the SPP region. The commenters also highlighted concerns by NERC.

Commenters stated that they request you withdraw this proposal and resubmit a proposal that complies with the Clean Air Act and states and be implemented under state laws . The commenters stated that the regulatory approach on these proposed rules goes well beyond the limits of Section 111(d) and that proposed rule infringes on state and local authority to regulate the utility business and the utility's ability to plan and operate the electric system in a reliable and
cost

- effective manner.

Commenters stated the proposal needs to be abandoned because it fails a basic cost

- benefit test. The commenters said the cost on consumers and small businesses are substantial while the direct benefits are essentially non

- existent. The commenters cited NER C stating the CPP would raise electricity prices by as much as 17 percent between 2017 and 2031, depending on which building blocks are available for compliance and force the retirement of as much as 169 gigawatts (GW) of coal

- fired capacity, on top of the 60 GW projected to close because of, principally, EPA's Mercury and Air Toxics Standards (MATS) regulation. The commenters said the CPP and MATS would decimate the nation's coal fleet, shutting down roughly two

- thirds of its existing capacity and impose a bout $366 billion in costs on the U.S. energy system between 2017 and 2031. The commenters stated higher energy costs impose disproportionate economic impacts on small business owners, as electricity costs often constitute a small firm's biggest expenses.

Response 2 : EPA received over 4 million comments to the proposed rule and many of them were constructive, offering specific changes that were helpful in developing the final rule. The final rule, is designed to avoid disturbing the power industry’s abili ty to maintain electric reliability. In addition the impact on jobs is modest but positive, on electricity and fuel costs is very reasonable. Please see section Vlll.G.2 for a full discussion of the impact of the rule on reliability and Section XI and th e Regulatory Impact Analysis for full discussions of the economic impact of the final rule.

Comment 3 : Summary of several previous comments.

Commenters summarized previous arguments and stated that EPA recognizes in the proposal that there is no technol ogical option to reduce CO2 emissions from EGUs, therefore the CPP's BSER relies almost exclusively on reducing or eliminating coal generation to reduce CO2 emissions. The commenters stated that MATS and the Cross

- State Air Pollution Rule (CSAPR) are forci ng the retirement of approximately 47

- 75 GWs of coal units and the CPP is estimated to force the retirement of an additional approximately 40

- 48 GWs of coal capacity. The commenters stated that eliminating this much coal generation severely threatens th e reliability of this country's electric grid. The commenters stated further that rural electric cooperatives are particularly vulnerable to impacts of reduced coal generation and that these impacts will fall on the poorest50 electric consumers in the countr y. The commenters stated that their ability to reliably serve members with low cost electricity will be compromised by the CPP.

Commenters stated that in addition to supporting jobs, coal also provides 40 percent of America's electricity. The commenters s tated further that by imposing dramatic emissions standards on all existing power plants under the threat of crippling fines, more plant closures and an overreliance on natural gas to provide electricity are certain to follow.

Commenters stated several con cerns regarding the proposed rule, with the concerns falling broadly into three categories

- timeframe, cost, and reductions in power reliability and diversity. The commenters stated further that the resulting reduction in coal generation could reduce ele ctric reserve margins and potentially affect grid reliability and power pricing.

Commenters stated that the entire security of the power grid is at risk with the implementation of the Clean Power Plan and that many non

- partisan groups, such as NERC, the Co ngressional Research Service, and FERC, are voicing reliability concerns related to the proposed Clean Power Plan.

Response 3 : EPA disagrees with these comments. See GHG Mitigation Measures TSD, RIA Chapter 3, and preamble sections V and VIII,G.2

.

Com men t 4 : The CPP Will Reduce Diversity of Energy Supply

Commenters stated that all energy consumers, whether they be manufacturers, commercial enterprises, or residential households, benefit from a diverse energy supply and an "all

- of

- the

above" energy strateg y. The commenters stated further that diversity of energy supply is not only critical in keeping energy costs reasonable, it is essential in ensuring steady and reliable streams of energy to power our factories and heat our homes. The commenters noted that for most Georgia industries, energy represents a major input cost, often second only to labor costs and that energy costs can often be a major factor in determining economic viability of an enterprise.

Commenters stated that in recent years, energy costs have been relatively advantageous for Georgia industry in large part because of the abundant and diverse supplies of affordable energy resources that are collectively keeping energy costs reasonable and supply reliable and provided several examples. The c ommenters further stated that if regulations such as the EPA's CPP force energy options off the table, energy prices will be more volatile, costs will increase, reliability will be threatened and ultimately Georgia's businesses and other U.S. firms will be less competitive in the global economy.

Commenters stated that consumers of energy, whether they are large manufacturers or individual households, benefit most from an all

- of

- the

- above energy strategy and that diversity of energy supply is not only critic al in keeping energy costs reasonable, it is essential in ensuring steady and reliable streams of energy to power our factories and heat our homes. The commenters stated further that for many businesses and industries that compete in a global economy, ener gy represents a major input cost that can ultimately determine viability. The commenters stated that51 as Georgia recovers from the Great Recession, ensuring stable and affordable costs and reliable electricity are even more crucial.

EPA's proposal is count er to an All

- of

- the

- Above energy policy

Commenters said consumers of energy benefit most from an all

- of

- the

- above energy strategy, and diversity of energy is critical in keeping energy costs reasonable and reliable. The commenters stated energy represents a major input cost that can ultimately determine viability is an advantage for many U.S. industries because of the abundant and diverse supplies of affordable energy resources and is spurring economic growth. The commenters stated EPA's calculations in the CCP are partially based on re

- dispatch from coal

- fired generation to natural gas

- fired generation to the fullest extent possible prospectively, and EPA's own analysis of the impact of these rules would significantly curtail coal

- fired generation, beyond retirements already seen or planned due to other environmental regulations such as the Mercury and Air Toxic Standards. The commenters said these rules, in combination with EPA's proposed New Source Performance Standards for coal

- fired and natural gas

- fi red power plants that effectively would prohibit any new coal

- fired power generation by requiring new plants to implement undemonstrated and prohibitively expensive carbon capture and sequestration technology, force energy options off the table. The commen ters added that historical experience teaches that long

- term energy prices and sources are unpredictable, and as a result, there are long

- term costs to losing diversity in power production, both in the cost and reliability of the domestic power market. The commenters concluded saying, by forcing retirements of diverse energy sources, the Clean Power Plan would threaten the reliability and affordability of electricity in this country.

Commenters recommended the EPA work with Congress, other federal agencies, industry, environmentalists, and labor to propose a "Clean Power Plan" that not only acknowledges carbon pollution, but also takes into consideration the economic impact electric generating units have on our local communities, as well as the reliability o f the electrical grid. The commenters stated further, the role coal

- fired power generation plays in meeting the nation's baseload power needs must be distinguished, and only then can the EPA realize an "all of the above" energy portfolio.

Commenters state d that EPA has not addressed the vulnerability of natural gas and oil pipelines to natural as well as man

- made disasters. Commenters stated historically gas supplies to Florida have been curtailed significantly during hurricanes in the Gulf. The commenter s provided several examples of disruptions from hurricanes. In addition, the commenters stated that EPA has failed to consider the vulnerability of pipelines to potential terrorist attacks and to cyber

a ttacks on supervisory control and data acquisition ( SCADA) systems or attacks on electricity grids and communication networks.

Commenters stated that Florida's current diverse mix of electric supply, including coal

- fired generation, has allowed the mitigation of potential risk of natural gas disruption due to natural or

man

- made causes. The commenters further stated that "[c]oal on the ground" has been the key to Florida's energy reliability and that, as provided by the CAA, the State of Florida should have the right to develop an ESPS that addresses the ga s supply disruption issues to assure Florida's electric reliability and security.52 Commenters stated that EPA's Draft Clean Power Plan demonstrates that significant carbon dioxide emissions reductions might be feasible. The commenters continued that if EPA seeks to produce a Clean Power Plan that is viable under conditions of foreseeable risks from natural hazards and man

- made threats to the electric grid, it will be essential to model mitigative measures that could offset degradations of electric grid reli ability in the period 2015

- 2030 and thereafter.

Commenters stated further that EPA should bear in mind that intentional assaults on electric grids are becoming a current reality and gave some examples of attacks outside the U.S. The commenters referred to November 20, 2014 comments by the Director of the National Security Agency, Admiral Michael Rogers, testifying in public before the House Select Committee on Intelligence that more than one nation state, and perhaps non

- state actors, had the capability to attack the U.S. electric grid now or in future years and that it is a matter of 'when' not 'if'.

Commenters stated that EPA's proposed Clean Power Plan will cause disruptive changes in the region's well diversified electricity mix.

Commenters stated that they are concerned about the prospect of our nation becoming too reliant on a single source of fuel (i.e. natural gas) to supply the majority of its energy generation. The commenters stated that EPA should re

- consider its rule to recognize the value of a m ore robust and varied fleet of fuel resources throughout the country, taking full advantage of each state's relative ability to take advantage of the resources readily available to it.

Commenters stated that rather than an "all of the above" energy strateg y, the rule would anoint some clear winners and under the approach as proposed, carbon

- based natural gas would become the backbone of the CPP. The commenters quoted results from studies by the HIS and CSIS. The commenters stated that given that the EPA

- p roposed CPP encourages substantial addition of intermittent generation from wind and solar generation, effects of the EPA proposed CPP on grid reliability and reserve margins must carefully be examined by appropriate Federal agencies in order to minimize a ny unintended consequences on the nation's electricity supply system.

Response 4 : EPA disagrees with the commenters. As demonstrated in Chapter 3 of the RIA, under the illustrative compliance scenarios analyzed, the EPA projects that future demand will

co ntinue to be met with a diverse energy supply. See in particular Figure 3

- 3 (Generation Mix) in Chapter 3 of the RIA. Furthermore, as discussed in Chapter 3 of the RIA, the EPA projects small changes in electricity price as a result of the rule, within t he range of historical price fluctuations.

Regarding the security of natural gas pipelines, the EPA does not project that this rule will have a significant impact on pipeline capacity. For more information, see the Resource Adequacy TSD.

Comment 5: Commenters stated that section 111(d) of the Clean Air Act provides states with significant discretion in terms of how they comply (market

- based regulatory mechanisms, demand

- side energy efficiency policies, renewable energy policies) with EPA's CO2 perfor mance targets. The commenters stated that working together, the grid planners and states53 can identify commonalities and conflicts among different state plans, and the grid planner can then create a regional transmission plan (updated on an annual basis) th at helps to meet the states' CPP targets.

Commenters stated that states and utilities are responsible for vigorous, ongoing use of the regional grid planning process. The commenters stated that states can obtain ongoing system information and modeling proj ections to allow them to align their individual plans/goals more closely with regional needs, and they can direct utilities with state law obligations to engage more completely in the planning process. The commenters stated that State commissions and othe r state entities are responsible for implementing renewable energy standards.

Commenters stated that they agree with EPA that meaningful emission reductions can be achieved from the electric sector while maintaining electric system reliability. The commen ters said while challenging, the proposed rule is designed to allow states great flexibility in developing their individual compliance plans, and they have been making investments in clean energy technologies over the last 15 years that have substantially reduced emissions from their generating fleet and saved customers billions of dollars in fuel costs while keeping electric rates low. The commenters stated the those benefits have been achieved while maintaining high reliability of service to our customers , and they anticipate that other power companies will have similar opportunities to improve their emissions profiles without compromising reliability and without shifting compliance costs to the customers of other utilities that have already undertaken sig nificant efficiency and emissions improvements in their generating fleets.

Response 5 : EPA agrees that there are multiple parties that can play a helpful role in the development of state plans including the state utility regulators, state energy offices, a nd grid operators. The structure, timing and flexibility in the state rule all encourage the engagement of these parties.

Comment 6 : Commenters stated that the compliance cliff imposed by a 2020 implementation milestone would likely have many adverse im pacts, including the premature shutdown of many existing coal

- fired EGUs. This outcome most likely occurs in those states that rely on coal

- fired generation for a substantial fraction of their electricity sales. The commenters noted several examples, as se t forth in Table 2 where coal supplies about one quarter or more of the electricity sold in a state and where EPA's has assumed that the re

- dispatch to NGCC will result in a one

third reduction in the state's coal

- fired generation by January 2020. The co mmenters continued that forcing the premature shutdown of these existing coal

- fired EGUs in 2020 will result in billions of dollars in stranded assets with many of these units not close to the end of their useful lives and, in many cases, the units have re cently installed expensive pollution control equipment to comply with newly adopted EPA regulations, such as the MATS Rule and the Regional Haze BART requirements. The commenters stated that consumers would likely incur higher electricity costs as a resul t of these stranded asset costs.

Commenters stated that MISO's analysis of the Proposed Rule projects that up to an additional 14 GW of coal capacity could be at risk for retirement in addition to the 12.6 GW of coal capacity slated to retire by the end of 2016 to comply with EPA's MATS rule. The commenters54 stated further that MISO is already on record stating that it is not on pace to achieve its goal of 14.5 percent reserve margins in 2016 largely due to planned coal retirements as a result of the MATS ru le and that this projected shortfall does not take into account the 14 GW of coal capacity that could be at risk due to retirements caused by implementation of the Proposed Rule. The commenters noted that any additional retirements as a result of the Propo sed Rule will reduce MISO's ability to meet reserve margins, which could negatively impact reliability.

Commenters stated EPA has made optimistic assumptions related to future fuel costs and ignored the impact of stranded costs on utilities, in particular publicly owned utilities and that EPA has not taken into account the additional costs for needed infrastructure to comply with the proposed rule, including new gas pipelines, additional underground storage, new gas gathering facilities, transmission lines and land acquisition. Commenters said their concerns include:

• Stranded Investments: Since most of the coal

- fired units will not reach the end of their normal useful life until long after the 2020 implementation date of the ESPS, the utilities would be lef t with significant stranded assets which still must be paid for even if they do not generate electricity. In addition, the utilities will either have to acquire new debt for replacement generation or enter into power purchase agreements (PPAs) with other u tilities. The combined impact of stranded costs and acquiring gas

- fired generation to offset existing coal generation could result in average electric rate increases greater than 20%, without considering the rate impact of ESPS driven increased natural gas prices.

• Future ESPS Driven Natural Gas Price Increases Understated: EPA's assumptions are very optimistic on the impact that the ESPS will have on future natural gas prices relative to a base case, and EPA's analysis indicates, with the exception of 2020 , that natural gas prices may actually decrease. The ESPS as proposed will radically change the generation mix of the county and shift greater dependency on natural gas. A study by the Aspen Environmental Group indicates that the elimination of coal

- fired generation would increase the annual gas usage by the utility industry from less than 8 trillion cu. ft. per year to about 24 trillion cu. ft. meaning that two thirds of the natural gas produced in the US would serve electric power plants compared to one third currently. The Aspen study uncovered an inconsistency related to projected natural gas prices and gas production prepared by EIA and others with regard to hydraulic fracturing.

Commenters stated that it would be imprudent to not consider the strong p otential for natural gas prices to double with the ESPS compared to a base case when estimating the rate impact of the proposed rule.

Commenters stated that premature retirement of the units in their area would compromise the reliability and fuel source d iversity of electric service and create risk to human health and safety as well as risk for property damage, creating unreasonable risks for area residents. The commenters stated that the limited availability of generation and transmission resources height ens the importance of each resource to reliability. The commenters also stated that geographic circumstances render the continued availability of coal of particular importance. The55 commenters stated that the importance of reliability should not be underes timated as it directly impacts the health and safety of residents in their frequently extreme climatic conditions.

Commenters stated EPA's proposal shuts down additional coal

- fueled power plants and forces the use of higher

- cost sources. The commenters sta ted the combined retirements (about 120,000 megawatts) are enough to power half of America's households (about 60 million), and many that will be shutdown have recently received emission control upgrades costing billions of dollars nationwide, spanning sev eral years of design, construction, and commissioning.

Response 6 : The start date of the interim period is now 2022 under the final rule. Additionally, building block two is phased in over the interim period. See preamble section V III.B . See RIA Chapte r 3 for projected impacts of this final rule.

Regarding the assertion that EPA has not considered costs of infrastructure, EPA disagrees with this comment. The cost

- effectiveness assessment of building block two does, in fact, consider the additional cos t of pipeline construction as well as the impact on natural gas prices. See the GHG Mitigation Measures TSD.

Regarding the claim that projected gas price impacts under the rule are understated, EPA disagrees with this comment. The EPA’s analysis of both the proposed and final rule is informed by the Integrated Planning Model (IPM), developed by ICF Consulting, which is a state

- of

- the

art, peer

- reviewed, dynamic linear programming model. The model incorporates a detailed representation of the fossil

- fuel supply system that is used to forecast equilibrium fuel prices. The model includes an endogenous representation of the North American natural gas supply system through a natural gas module that reflects a partial supply/demand equilibrium of the North Amer ican gas market accounting for varying levels of potential power sector gas demand and corresponding gas production and price levels. This module consists of 118 supply, demand, and storage nodes and 15 liquefied natural gas re

- gasification facility locat ions that are tied together by a series of linkages (i.e., pipelines) that represent the North American natural gas transmission and distribution network. For more information, see RIA Chapter 3 and the IPM Documentation, available in the docket.

See sec tion 4.7 and 5.11 of this document for EPA’s response to comments relating to stranded
assets

.

Comment 7 : Commenters stated that EPA should consider the role of demand response and load management programs in optimizing the electric systems to utilize low er carbon generation

resources. The commenters noted that they have had load management programs in place for more than 30 years and this system is capable of providing more than 300 megawatts of direct summer load control. The commenters provided an exa mple of their electric thermal storage program and stated this program, and its alternatives, highlight the difference between "when" energy is consumed and "how much" energy is consumed.

Response 7 : The EPA agrees that that a wide variety of demand

- side energy efficiency measures (including demand response and load management programs) can be cost

- effective strategies for reducing CO2 from affected EGUs. These measures are in widespread use across the country and56 can create multiple benefits beyond greenhouse gas mitigation including lower electric bills, positive investments and job creation, and reduction of other air pollutants from power plants. The EPA recognizes that a wide variety of demand

- side energy efficiency measures have been achieving significant energy savings for years with additional opportunity to achieve energy savings in the future and to do so cost effectively. The EPA has determined not to include demand

- side energy efficiency (bui lding block four) in the BSER of this final rule and therefore we do not need to address it further here. This determination is discussed in section V.A of the final rule preamble of the CPP. Even though demand

- side energy efficiency is not being included in the BSER in this final rule and, thus, not included in the determination of emission performance rates, the final rule provides states the flexibility to use demand

- side energy efficiency measures in their state plans for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the applicable requirements established in section VIII of the preamble for the CPP.

Comment 8 : Commenters stated that the proposed CPP provides states and developers additional incentives to rapi dly expand their non

- hydro renewable capacity to displace existing coal generation. The commenters stated that the state calculations assume that non

- hydro renewable capacity could grow rapidly by 5 percent per year, and that this incremental renewable
gen eration represents well over twice the energy currently supplied by variable energy resources and would be dominated mostly by new wind, and to a lesser extent, new solar capacity. The commenters stated that successful large

- scale storage solutions have no t yet been commercialized, that these storage technologies support the reliability challenges that may be experienced when there is a large penetration of variable energy resources, and that their development should be expedited.

Commenters stated that som e regions that depend upon long interstate gas pipelines have limited underground storage and increased risks of sustained electric blackout and that natural gas production is concentrated in the southern United States. The commenters stated further that adding to risks of long

- distance energy transmission, geological factors prevent significant underground natural gas storage in about 40% of states. The commenters stated further that adding to risks of long

- distance energy transmission, geological factor s prevent significant underground natural gas storage in about 40% of states.

Response 8 : See Chapter 4 of GHG Mitigation Measures TSD for a discussion of potential growth in renewable electricity generation under the final rule. Regarding gas pipeline an d storage, see Resource Adequacy TSD.

Comment 9 : Commenters stated that EPA has not demonstrated that all states can increase the utilization of existing natural gas combined cycled units to 70 percent and that shifting the way these units are operated wi ll impact other forms of generation and the grid.

Response 9 : EPA disagrees with this comment. See section V.D. of the preamble and Chapter 3 of the GHG Mitigation Measures TSD.57 Comment 10 : Commenters stated that EPA has not properly taken into account the costs associated with the increase of natural gas usage. The commenters stated that while EPA estimated a modest increase in natural gas costs, an increase in delivery costs was not factored in.

Response 10 : EPA considered delivery costs of gas. See C hapter 3 of the RIA and Chapter 10 of the IPM Documentation.

Comment 11 : Commenters requested that more information re: the agency's cost

- benefit analysis for the proposed rule be provided

- specifically, explain in greater detail how "social cost of carb on" estimates were calculated.

Response 11 : See Chapter 4 of the RIA for details on how the ‘social cost of carbon’ estimates were calculated

. Chapter 4 provides a detailed discussion about the calculation of the social cost of carbon and also references t he social cost of carbon technical support documents for additional details, available at https://www.whitehouse.gov/omb/oira/social

- cost

- of

- carbon. In addition, see response to comments in section 8.7.2, comment 1, for detailed discussion about the metho dology used to estimate social cost of carbon.

Comment 12 : Commenters stated the single biggest winner of this rule is natural gas and by 2030 the role of gas in our energy mix is expected to rise from 27 percent to 32 percent. The commenters further st ated this should concern us for a number of reasons: the rule does not appropriately or accurately measure fugitive methane emissions, which when factored into a lifecycle analysis of gas, may make it even dirtier than coal; more reliance on natural gas me ans more fracking, which means more contamination of our air and our water, more predatory leasing practices, and more corporate money spilling into our local, state, and federal elections to help purchase favorable regulations; and the rule encourages mor e gas infrastructure, meaning pipelines, compressor stations, processing facilities, and gas fired plants.

Commenters stated increased reliance on natural gas will not reduce our emissions, but will only continue our dependence on dirty fossil fuels, and t hat the climate impacts of natural gas remain unclear and could be as bad as coal. The commenters also noted that additional natural gas would also require increased fracking, releasing high levels of toxins in the air near fracking wells that cause such health impacts, contaminates drinking water with billions of gallons of toxic waste each year, and could potentially result in an increase in earthquakes.

Response 12 : On EPA’s estimates of methane emissions from natural gas systems, please see response to comment 18 in section 8.2 of this responses to comments.

Comment 13 : Commenters provided examples and detailed explanations of how advanced technologies can ensure that the changes envisioned by the Proposed Rule will have no58 significant adverse impacts on grid reliability and cost, including those changes determined to be part of the BSER. The commenters discussed the reliability and flexibility benefits of energy storage and distributed resources, as well as how renewable energy and low

- emission dispatc hable NGCC can complement each other both technologically and economically, allowing the electricity system to provide reliable, low

- carbon energy while hedging against future uncertainties. The commenters further stated that accelerating the modernization of the electric grid to integrate the various resources envisioned as part of BSER can actually improve reliability and decrease costs, for example, by cutting peak demand. The commenters also provided examples from New York and Colorado as well as cited studies that indicate advanced planning will ensure that the CPP does not create reliability concerns across the different state market structures. The commenters provided several references to support the detailed explanations and statements.

Commenters s tated that some stakeholders are resistant to the plan because the grid can't handle distributed energy. The commenters suggested building a grid based on the constraints of centralized fossil fuel energy so it can be modified to support distributed energ y.
Commenters stated the EPA has proposed rules that are not based on any existing technology that has been proven on a commercial scale, and we must continue to invest in innovative technologies, including clean coal and natural gas technologies, to ensu re our energy supply remains accessible, affordable and reliable for all Americans. The commenters said our great country should be a leader in developing the technologies so that we can export them to the world, but it is unreasonable to require the use o f technologies that do not yet work at the commercial scale.

Commenters stated that several recent studies have raised new questions about whether natural gas can form the cornerstone of a carbon

- emissions reduction strategy in that abundant natural
gas u se displaces not only higher carbon coal

- fired generation but also generation from renewable sources and nuclear power and as a result, substantially change the global energy system over the decades ahead without producing commensurate changes in emissions or climate forcing. The commenters stated that it is important to examine whether the CPP encourages states to move quickly enough to adopt renewable energy and energy

- efficiency technologies and to look at the extent to which other state and federal poli cies may be needed to incentivize the deployment of these technologies.

Response 13 : Thank you for your comment.

Comment 14 : Commenters stated relying on power purchase agreements (PPAs) to replace the generation lost through retirement of Arizona's coal

- fired power plants has limitations for the following reasons:

• PPAs are bilateral agreements and, as such, risk default, potentially leaving the utility without an anticipated resource.

• PPAs are generally subject to additional regulatory procurement proce sses that require additional lead time and higher costs.59 • Power procured through a PPA must be matched with transmission capacity to deliver that power to the load center, and such capacity does not currently exist.

Response 14 : See preamble section V.D. W hile there may be limitations to PPA arrangements, the EPA believes that they can be a viable options depending on circumstances, and believes that the final rule provides the flexibility for sources to utilize many additional pathways to compliance.

Comm ent 15 : Commenters discussed inconsistencies in the information in Tables 5, 6, 7 and 15 of the RIA that impact the outcome of the analysis. Regarding Table 5, the commenters stated that amount of power generation from combustion turbines (CTs) as opposed to combined cycles is quite low in the modeling, and it is unclear if EPA's model took into account that CTs handle short

- term load following and peak needs and have high heat rates compared to combined cycles. The commenters posited that if CTs produced o n the order of 100 TWh instead of 20, it would mean that the emissions reductions from fuel switching would not be as great as the model predicted. Alternatively, if CTs operate less frequently than they do today, the commenters stated that this implies th at the coal power fleet will have to accommodate load following duties, which will increase the CO2 emission rates of coal power plants. The commenters also pointed out an inconsistency in EPA's state goal computation spreadsheet. The total amount of power produced from coal plants is 1,098TWh or 21% less than what was used in the cost

- benefit analysis which could impact the outcome of the cost

- benefit analysis.

Commenters further stated that additional details from EPA regarding Table 6 estimates would be useful. The commenters had the following observations: In 2012, there were 323GW of coal

fired capacity as compared to the 211GW nationwide in 2020, which could be interpreted as a projection that approximately 35% of the existing coal fleet will be retir ed by 2020. If the base case for 2020 calls for 244GW of coal capacity, it seems to indicate only 33GW of retirements from the proposed rule, however it is unclear what occurs regarding the other 79GW. If 112GW of coal generating capacity is retired, it is unclear what capacity will replace it to ensure adequate reserve margins. Additionally, the commenters stated that Table 6 predicts there will be a total of 251GW of NGCC in 2020 which is only 4GW more than existed in 2012.

The commenters pointed out tha t Table 7's average capacity factor of 57% from the NGCC fleet in 2030 is significantly less than the 70% capacity factor premised in the proposed rule preamble, and less than the 64% used as the basis of the proposed state targets.

Regarding Table 15, th e commenters suggested EPA consider that natural gas prices may increase beyond 10% if, as predicted, the power sector's increase of natural gas increases by 25%. The commenters stated that the price prediction has an impact on the overall cost of implemen ting the fuel switching strategy of Building Block 2.

Commenters stated that in the Regulatory Impact Assessment (RIA), EPA estimates an annual increase of 3.1% in electric rates by 2030, whereas NERA estimates the increase to be 12% annually for option 1 in the rule. The commenters also stated that the RIA indicates the modest increase in rates will be offset by reduced electric usage. The commenters further stated that the60 NERA study indicated that the cumulative cost of energy efficiency programs required for BB #4 at $560 billion but it is very likely th at the electric rate increases necessary to pay for BB #4 energy efficiency programs will more than offset the savings from reduced electric usage by

consumers.
Response 15 : EPA’s modeling includes reasonable assumptions regarding the heat rates of combust ion turbines. The cost

- benefit analysis reasonably assess the impacts of the rule in a future year, and as such it is appropriate to use future demand forecasts rather than 2012.

Regarding retirements, the RIA appropriately reports projected retirements incremental to a base case, allowing for analysis of impacts related to the rule. Furthermore, EPA appropriately removed capacity from the model based on public announcements of future closures. Removal of such capacity pre

- empts the model itself from ma king any decisions regarding that capacity’s future status or configuration; such capacity is simply no longer available for the model to consider in optimizing electricity supply to meet demand.

The EPA believes that the gas prices projected both in the cost

- effectiveness analysis of Building Block 2 as well as the impacts analysis presented in the RIA of the final rule are reasonable. See Chapter 3 of the GHG Mitigation Measures TSD and Chapter 3 of the RIA.

The EPA believes the retail price projection s presented in the RIA for the final rule are reasonable estimates of the two illustrative compliance scenarios.

Comment 1 6: Commenters stated that "EPA's explanation of the energy requirements language in Section 111(d), as it relates solely to reliabili ty and providing sufficient flexibility to enable affected sources to follow state energy plans, is more narrow than warranted." The commenters cited the 1990 Senate Committee Report which explained that "the incentives created by the allowance market shou ld stimulate innovations and technologies and strategies used to reduce emissions. [T]he allowance market should encourage sources to exploit energy efficiency, enhanced emission reduction or control technologies; fuel

- switching and least

- emissions dispatc hing in order to maximize emission reductions." The commenters stated that it is therefore congressional intent for energy impacts to be considered at the source level, the industry level, and the national level over time and recommended that EPA design th e final rule with this consideration to avoid simply switching from one fossil fuel source to another. The commenters added that, "while heat rate improvements for coal EGUs and integration of lower emitting natural gas combined cycle units might be essent ial in the interim for a number of states to lower their emissions levels drastically, exclusive reliance upon just those two building blocks, for purposes of compliance, would not address long

- term considerations of fuel price risk, climate action, or sys tem reliability."

Response 1 6: This rule does not require exclusive reliance on Building Block 1 and 2. See preamble section VIII.61 Comment 17 : Multiple commenters discussed impacts of the proposed rule on local and municipal entities.

Commenters stated that the proposed rule will increase wholesale and retail rates for their city in Minnesota. Commenters stated an analysis of the effect of the proposed rules indicates rate increases of nearly 20% ($35 million annually) in supplemental power supply costs

. The commenters stated that the rate increase will put significant economic pressure on residential, commercial and industrial customers. The commenters further stated that EPA's projection that the overall effect of the rule will be a decrease in the c ost of electricity to end users is flawed in many respects, and does not fully account for all of the costs required to comply with the proposal.

Commenters stated that transporting the large volume of water requires a relatively significant amount of elec tricity and electricity is a major portion of the cost incurred in delivering drinking water to customers. The commenters indicated that AECC has indicated that the Clean Power Plan can potentially raise electrical rates by as much as 30% and would have a significant impact on the rates charged to customers, both residential and industrial. The commenters stated that without electricity the water from the source cannot get to the plant, the water cannot be treated, and the drinking water cannot be deliver ed to customers. The commenters also noted that they have serious concerns about any plan that would jeopardize the reliability of the electrical grid.

Commenters stated that electric power customers in the Cincinnati region and Ohio confront immediate an d extensive service issues with generators in the PJM system ready to shut down base

- load coal plants, in response to EPA's MATS. The commenters stated further that the CPP does not seem likely to initiate the kind of investments and the scope of investme nts required to assure a robust electric supply in the Cincinnati region and Ohio. The commenters noted that this concern pertains to replacement and that new and additional generating capacity presents yet another major set of issues.

Commenters stated th eir concern over the impact of this proposal extending beyond the electric markets. The commenters stated this proposal will create significant new demand for natural gas and noted that their front range power plant, if it is run at full capacity, will con sume as much natural gas in a year as the entire retail distribution load. The commenters stated that one power plant equals about a Colorado Springs' worth demand for natural gas for one power plant and want the EPA to be fully aware they use a lot of nat ural gas.

Commenters stated that with its diverse portfolio of energy assets electric reliability in the Lansing area has been maintained with minimal transmission support. The closure of generation in Lansing would make it very difficult to meet peak lo ads, and the Proposed Rule would compound the dilemma of inadequate power supply by indirectly restricting new generation from natural gas, and significant emphasis on greater wind and solar power, or some combination thereof.

Commenters stated that most I EE projects include other benefits, including on

- site fossil fuel savings and reduction in water consumption. The commenters stated that IEE projects often reduce the consumption of water significantly below the consumption levels existing before the

conse rvation measures are installed and since the movement of water is energy intensive, the62 water savings enabled by IEE projects create additional, ancillary GHG reductions by avoiding the energy consumption that would otherwise be needed to transport that wa ter.

Response 17 : The EPA disagrees with these comments. See RIA Chapter 3 for EPA’s projections of retail electricity price impacts, which the EPA estimates will be less than one percent on average in 2030. Additionally, as discussed in the same chapter of the RIA, EPA projects gas demand to decrease. Regarding reliability, see section 8.9 of this document.

Comment 18 : Commenters stated that EPA fails to consider whether states will be able to attract some 103 gigawatts of new generation to replace the retired coal resources with the limited tools available to them. The commenters further stated that EPA arbitrarily and capriciously assumes that developers will respond to price signals and that all the need for new generation will be met accordingly, bu t if not, the states' limited powers may be insufficient to incentivize the amount new generation required to meet the emissions reductions targets. The commenters remarked that authority to adopt laws and regulations that promote utilization of certain ty pes of generation facilities over others under the FPA may simply not be enough to attract the amount of new generation necessary to achieve the emissions reductions targets on the timeline required by the interim goals without compromising reliability. Th e commenters explained the limits and abilities of states under the FPA and stated that ultimately, "states may lack the ability to offer the type of incentives necessary to attract the amount of new generation needed to both meet the reductions targets an d maintain reliability". The commenters provided the following example: "states could adopt a standard requiring that utilities purchase 100 percent of their power from NGCC units. However, if those NGCC units do not exist, states have little ability to di rectly require that utilities or private developers invest in new generation facilities. Courts have struck down state subsidies of facilities and rate subsidies. States are limited to using tools such as tax credits or in the case of regulated utilities, such measures as guaranteeing cost recovery". The commenters added that such tools are likely to be politically charged and unpopular and may insufficient to bring enough new generation online to replace the generation forced into retirement by the Propose d Rule.

Response 18 : The EPA disagrees with this comment. Regarding new capacity, the EPA projects a decrease in new NGCC capacity and a moderate 17

- 20 GW increase in new renewable capacity by 2030 as a result of this rule. This increase, projected to oc cur over 15 years, is significantly less than the amount of new capacity that has been built historically (for example, the EIA Form 860 reports more than 50 GW of new capacity built in 2002 alone). Regarding the technical feasibility of the amount of ren ewable energy included in BSER, see GHG Mitigation Measures TSD. Additionally, see section VIII for a discussion of state plans and the flexibilities available
to states

Also, EPA notes that it is unclear how the example regarding the requirement to pu rchase 100 percent of power from NGCC that do not exist is relevant to the final rule, which is based on shifting generation to existing NGCC. For more information on BSER, see section V of the preamble.63 Comment 19 : Commenters stated that seniors on fixed or diminishing incomes pay a disproportionate share of t heir modest income for utilities and believes our nation must preserve and grow the contribution of coal

- based electricity. The commenters stated that future e nergy price increases are likely to outstrip real household incomes among the 63% of America's 65+ households with gross annual incomes less than $50,000 and that EPA's newest proposal to regulate greenhouse gas emissions from existing power plants will fu rther strain the budgets of low

- and fixed

- income seniors.

Response 19 : EPA disagrees with this comment. While the EPA projects that this rule may result in small increases in retail electricity rates, the EPA projects that average electricity bills will decrease due to demand

- side energy efficiency. See Chapter 3 of the RIA.

Comment 20 : Utility operation issues and challenges

Commenters listed the following operational issues and challenges for electric utilities as a result of the proposed rule:

• States will have to undertake considerable analysis to determine the best way to meet their targets.

• Use of a rate standard will require use of Evaluation, Management and Verification of reduction measures as part of their SIP, which is difficult and prob lematic, especially for efficiency projects. EPA will allow conversion of the rate standard to a mass emissions cap (in tons) standard but because the translation involves forecasting future generation levels and emissions, and the proposed rules themselve s affect those levels, therefore selected methods may be controversial. Not properly accounting for demand growth in the conversion to a

mass

- based cap could make compliance more costly and difficult, as opposed to the rate cap which implicitly accounts fo r growth in emissions over time due to demand growth.

• Units are typically dispatched in economic merit order subject to reliability and security constraints. Since some renewables such as wind and solar have no fuel costs, they tend to also be used first, but since they are generally not

- dispatchable, they are used as available assuming the system operator can do so reliably. Even when the opportunity for greater dispatch of NGCC is available, there will be cost consequences. These costs include the strande d costs of coal plants that will no longer be operated and thus may be shut down and for which owners will still have debt obligations to pay, the costs of operating out of merit order dispatch, and increases in the costs of natural gas as a result of incr eased demand.

• Operating NGCC plants at a much higher capacity factor will place significant wear and tear on these plants and require significantly more maintenance. If the64 plants break down, their lost production may need to be met by less efficient plant s, actually increasing emissions or possibly resulting in reliability problems.

• The CPP fails to take into account the long lead time needed for new electric transmission projects. The lead time for building new electric transmission usually exceeds the ti me needed to build new gas plants, so infrastructure may lag. For example, the Southwest Power Pool has estimated that the study, planning and construction process for new transmission facilities can take as much as eight and a half years.

• Building block 2 is in direct conflict with building block 1 which expects coal units to achieve heat rate improvements. Dispatch preference to NGCC will necessarily require coal units to operate at lower capacity factors, resulting in average heat rates for coal plants that will decline compared to current levels. Giving such high dispatch preference to NGCC and the resulting increased use of coal for regulation could also require the system operator to carry more operating reserves in order to maintain sufficient regula tion reserves, and in particular to provide the minimum ramp rates necessary to meet reliability standards.

• Many areas simply don't have alternatives to the current dispatch of coal.

Commenters stated that Michigan currently generates over 50 percent of it s generation from coal, has a substantial amount of combined cycle capacity, faces an electric capacity shortfall in the

near

- term, and has a stringent interim goal under the CPP. The commenters raised key concerns for Michigan, including:

• Threats to Elec tric Reliability: Michigan already faces a shortage in electric capacity, and the CPP will add to that shortage by requiring a significant amount of curtailment of coal generation. State implementation plans will not be in place until at least 2017, leavin g insufficient time to bring online by 2020 new capacity to compensate for the loss in coal capacity, threatening reliability. Temporary solutions such as postponing coal curtailments are rendered impractical because of the stringency of Michigan's interim CPP goals.

Commenters stated that the Texas Public Utilities Commissioners are concerned that the proposed rule will significantly degrade the reliability of the Texas electric grid, causing the grid to fail to maintain reliability standards established b y the FERC. The commenters paraphrased remarks from the Texas Public Utilities (PUC) chairman to the Texas House of Representatives Committee on Environmental Regulation's hearing that the proposed rule

• According to EPA, more than 40 coal and gas plants w ill need to retire in Texas. The proposed rule mandates a 52% reduction in coal generation. How will that effect reliability? Texas is in three transmission organizations. It is extremely difficult to try and figure out how to coordinate compliance with th is rule. In the Southwest Power Pool's preliminary analysis, its algorithm could not produce results because of reactive deficiencies. And those deficiencies were the worst in Texas, Oklahoma, and Kansas. That means there will be significant loss of load o r65 rolling outages. When SPP measured that impact on generation, its reserve margin would drop to 4.7% by 2020, and by 2024 it would drop to

- 4%. The current reserve margin in SPP is 13.6%.

Commenters also included remarks from a PUC commissioner regarding reliability and calculations in Block 3:

• In determining the BSER for Block 3, EPA uses a capacity factor for Texas wind of between 39% and 41%. For reliability purposes, ERCOT assigns wind an 8.7% wind capacity factor which is the estimated availability of wind during summer peak. ERCOT is late in the process of recalculating the effective load

- carrying capability (ELCC) of wind and is expected to assign West Texas wind an ELCC of 14.2% and coastal wind and ELCC of 32.9%. Both figures are still substantiall y below the capacity factor the EPA assigns to Texas wind energy.

Commenters stated that Texas will not be able to meet the requirements of Block 3 (renewable) and that with reliability problems of natural gas (Block 2) and the technical infeasibility of c oal

fired efficiencies to the level sought by EPA (Block 1), all that remains is "demand management" or rolling blackouts. The commenters noted EPA has failed to examine the costs of forcing Texas to rely predominantly Block 4 demand management and that E PA has not calculated either the costs to the refinery industry or the effect of rolling blackouts on our industry (or any other industry).

Commenters recommended that EPA should withdraw the proposal until it adequately examines the implications of the lo ss in electric grid reliability and until it can ensure the nation's electric grid will maintain the reliability required by FERC.

Commenters stated that the analysis by SPP of the Proposed Rule is instructive to issues that could be faced by all regional transmission organizations. The commenters stated that in response to a question on the reliability concerns over EPA's Proposed Rule, SPP responded that it expects that "equipment overloads, low voltages, and dynamic stability issues will result from EPA

- assumed fossil fuel generator retirements." SPP also states that if electric transmission upgrades are needed to facilitate the increased electricity production from Natural Gas Combined Cycle ("NGCC") units, it could take up to 8.5 years to construct at c osts ranging between $1 million and $2 million per mile, excluding substation cost.

Commenters stated the utility must continue its resource planning activities to meet the needs of its customers.

Commenters stated the impacts of regulations on BPA were un clear since BPA is subject to an array of federal statutes and regulation, there is an absence of new federal law in this area, and it is expected that states would be the implementing role. The commenters stated the rule and targets call for methods of st ate implementation that are not yet known which could implicate matters such as development and funding of new transmission lines, pipeline needs, new technologies, market proposals, cap and trade constructs, or other unknown policies. The
commenters state d the importance of keeping the lines of jurisdiction clear, and to ensure that a Power Marketing Administration like BPA is not targeted to take on any added system risk.66 Response 20 : See the preamble for the updated performance rates and revised start d ate of the interim period. Additionally, see sections V I and VIII of the preamble, as well as the GHG Mitigation Measures TSD.

Comment 21 : Commenters stated that for states where building block 2 targets were adjusted to account for coal dependence, new gas plants and associated infrastructure in time is not likely possible and the costs will be exorbitant. The commenters also stated that it is not clear a regional trading system will help because if each state is tasked to meet its BSER

- based emission l imitations, there will not be much of a market to trade for lower emissions and reliability may be a concern, even in very large RTOs. The commenters added that individual utilities will have similar difficulties regarding costs, infrastructure and generat ion, and trading concerns.

The commenters stated that appears to be seeking comments on increasing the requirements for coal dependent states based on the option of building new NGCC plants in these states, making building block 2 even more difficult to a ddress. The commenters also cited statements from Southwest Power Pool, Mid

- Continent ISO, ERCOT and NERC discussing reliability problems and cost issues, even assuming a regional solution, which may not be allowed:

• Southwest Power Pool indicated increase d thermal overloads and low voltages due to EPA's assumed retirements and peak cases are not solving under single contingency, which indicates low voltages due to lack of reactive support.

• The Mid

- Continent Independent System Operator found that the cost for the region of implementing building block 2 only was $53 per ton of carbon reduced, that gas use would increase from 5 to 26 percent, and that there is uncertainty as to whether parts of the system will have adequate reserves in 2016, even before imple mentation of the CPP.

• ERCOT indicated that the will result in the retirement of between 3,300 MW and 8,700 MW of coal generation capacity, could result in transmission reliability issues due to the loss of generation resources in and around major urban ce nters, will strain the ability to integrate new intermittent renewable generation resources, will also result in increased energy costs for consumers in the ERCOT region by up to 20% in 2020 before accounting for the costs of transmission upgrades, procure ment of additional ancillary services, energy efficiency investments, capital costs of new capacity, and other costs associated with the retirement or decreased operation of coal

- fired capacity in ERCOT.

• NERC found that the proposed CPP requires comprehen sive reliability assessments to identify changes in power flows and ERSs to maintain BPS reliability, and suggested that more time may be needed to accommodate changes in BPS.

The commenters then discussed other commenters' views on building block 2 and s tated that possible changes to the glide path of reduction targets between 2020 and 2030 and a phase

- in of67 building block 2 might be helpful. The commenters added that many observers have suggested that FERC should also undertake or require reliability stu dies of the CPP proposal to determine the viability of the CPP and its potential impacts. The commenters noted FERC Chairman Cheryl LaFleur suggested that some type of reliability mechanism be incorporated into the final rule.

Commenters stated that unlike coal, the price of natural gas is very volatile and the impact of this volatility on electric bills is something that the electric consumer is experiencing today and will undoubtedly be exacerbated by the proposed ESPS. The commenters argued that EPA did not take into account the fact that Florida utilities are served by only two pipelines with gas coming primarily from the Gulf of Mexico and that these gas pipelines are nearly totally subscribed which means that a third pipeline would be required for Flo rida in order to meet the requirements of BB #2. The commenters further stated that the adequacy of even a third pipeline to satisfy the requirements of BB #2 and whether it can be completed in time to meet the ESPS deadlines is uncertain.

Response 21 : Se e sections V and VIII of the preamble for timing of the final rule, including discussion of a glide path. Regarding Building Block 2, the EPA considered existing gas pipeline capacity. See Chapter 3 of GHG Mitigation Measures TSD and Resource Adequacy TS D.

Comment 22 : Difficulty integrating renewable sources into the grid

Commenters stated the Building Block 3 increases deployment of intermittent generation sources, and the growth of renewable generation is highly dependent upon permitting, financing, transmission, access, and technical challenges posed by integration of intermittent electricity sources into the grid. The commenters further stated they have not seen any indication how EPA is taking those factors into account.

Response 22 : See preamble s ection V.E and Chapter 4 of the GHG Mitigation Measures TSD.

Comment 23 : Unr ealistic Building Block Costs. Should Consider cost of all four Building Blocks

Commenters stated EPA's technical memo on cost considers only Building Blocks 1 and 2. To be

accura te and realistic, the commenters said EPA should consider costs for all four Building Blocks and include an estimate of the costs associated with stranded assets due to this rulemaking. The commenters added that the 2.7

- 4.4% electricity cost increases in cluded in the technical memo as a result of 111(d) implementation are highly uncertain due to the complexity of the plan and length of implementation.

Commenters stated the application of any one of EPA's build blocks to the TS Power Plant are
not reasona ble and therefore cannot constitute BSER. The commenters said building block 1 Heat Rate Improvements is not reasonable from a technical or cost perspective; TS Power Plant could not reasonably achieve and maintain a heat rate improvement of 6%. The commen ters68 stated the EPA does not acknowledge that load factor is a very important determinant of heat rate for units with varying load, referring to Abatement Measures TSD at 2

- 25. The commenters also referred to the International Energy Agency (IEA) that repo rts a 10 percent change in load factor can result in a four percent change in heat rate ( http://www.iea.org/ciab/papers/power_generation_from_coal.pdf ). The commenters stated bec ause TS Power Plant is not base loaded, the TS Power Plant cannot achieve the improvements in heat rate associated with load factors that EPA assumes are available for other utility EGUs.

Commenters stated the TS Power Plant operates under a Power Purchase and Sale Agreement with NV Energy, whereby power generated at the TS Power Plant is transmitted to Newmont mines with a corresponding benefit of an agreed pricing arrangement for power used at several Newmont mine sites in northern Nevada. The commenters stated the TS Power Plant is not a base

- loaded unit; rather, the facility load is determined based on NV Energy load schedules submitted to the TS Power Plant on a day

- ahead basis, and typically the load schedules involve the TS Power Plant shedding load d uring the evening hours and operating at higher loads during the daytime. The commenters stated the daily load change has a significant impact on heat rate, with much higher heat rate experienced at lower loads, when plant efficiencies are greatly diminish ed, i.e., in the TS Power Plant's experience, there is an inverse relationship between the load factor (or capacity factor) and the heat rate. To illustrate this, the commenters stated the hourly load and accompanying heat rate was examined for 2012, a yea r with 7,621 operating hours at the TS Power Plant. The commenters said during the year, load varied between the lowest sustainable operating loads and the highest design loads (a variation of between 80 MW and approximately 215 MW).

Commenters stated the boiler load for the year has been classified into three load bins, representing low, mid and high loads for the facility.

Commenters stated that as indicated, average heat rate for the year is 10,677 Btu/KWh, and the variation in heat rate between the hig h and low loads is 1,949 Btu/KWh, with low load heat rates approximately 20% higher. The commenters said if the TS Power Plant were base loaded, a substantial improvement in annualized heat rate could occur; however, since the plant load at the TS Power Pl ant is determined by outside parties on a daily basis, the constantly varying load reduces opportunities for heat rate improvement that may occur in base

- loaded plants.

Commenters stated that the state

- of

- the

- art Air Quality Control System (AQCS) at the T S Power Plant and includes low NOx burners, over

- fire air and SCR for NOx controls; spray dry absorber for SO2 reduction; powdered activated carbon and calcium chloride injection for mercury removal; and a fabric filter baghouse for particulate matter remo val, and that the systems were designed and operated to maintain compliance with some of the lowest emission limits in the country. The commenters said the continuous power demand associated with operating the AQCS is approximately 2 MW, or roughly 10% of the total parasitic load of the TS Power Plant, and there are virtually no opportunities to reduce the plant load associated with the AQCS without compromising compliance obligations under the facility's PSD permit.

Commenters stated that the proposed rul e does not: 1) adequately consider and improperly dismisses the effects of, the CAA's new source review ("NSR") program on the cost and achievability of the proposed rule; 2) adequately consider whether it is feasible for multiple69 building blocks to be imp lemented at the same time in order to meet the EPA's reduction goals, and 3) adequately consider or explain the EPA's treatment of nuclear and hydroelectric generation.

Commenters stated EPA's Block 2 proposal is unreasonably costly and creates stranded co sts for coal assets. The commenters said they utilized natural gas forecasts from the U.S. EIA; the base EIA natural gas forecast assumes that gas prices would be unaffected by the greatly increased gas usage demand, which may be optimistic. The commenters analysis assumed the following:

• Additional firm gas transportation capacity (130,000 MMBtu/day) starting in 2020

• Natural gas generation maximized

• Operating constraints removed from coal units, which is not operationally feasible

• Co

- firing the 4 Big Bend coal units, 70% coal 30% natural gas

• Polk 1 IGCC operating as a natural gas combined cycle only (although EPA's proposal does not require IGCC units to limit dispatch in Block 2)

• Implemented environmental dispatch to minimize CO2 emissions

The commenters analysis was conducted through 2043 with no cost impact until the CPP proposal commences in 2020, and assuming natural gas prices are unaffected by increased demand, the net present customer impact value in 2014 dollars for the commenters to comply with B lock 2 is $2.0 billion. The commenters said assuming gas prices are affected by increased demand, the net present customer impact value in 2014 dollars is approximately $5.3 billion. Commenters 23712 said despite maximizing re

- dispatch of resources from c oal to natural gas, which is operationally infeasible, the commenters best case result from Block 2 of 1,007 lbs/MWh falls short of the CPP proposed limit of 740 lbs/MWh, and the 2030 average customer rate impact would increase approximately between 13 to 32 percent due to Block 2 impacts alone. The commenters said EPA should work with states to adjust the Block 2 goals to a level that complies with CAA 111(d)(1) remaining useful life considerations, recognizes early action, acknowledges the importance of f uel diversity, preserves the thousands of jobs at risk, and allows existing units to exist and operate as intended by the CAA.

Response 23 : See section V of the preamble for an evaluation of the cost

- reasonableness of the combination of all three building blocks.

Regarding achievability of heat rate improvements, including consideration of load factor, see chapter 2 of the GHG Mitigation Measures TSD.

See for a discussion of NSR, see section X.A. of the preamble. Regarding hydro and nuclear, see section V.E. of the preamble and the GHG Mitigation Measures TSD.

The EPA disagrees with the comment regarding reasonableness of building block 2 costs. EPA’s analysis of the cost

- effectiveness of building block two is based on modeling projections which70 account for future gas price increases that would likely result from an increase in natural gas demand. Additionally, note that in the final rule building block two is phased in starting in 2022. For more detail, see final rule preamble section V.D. and GHG Miti gation Measures TSD.

Regarding stranded costs, EPA disagrees. See section 5.11 of this document.

Comment 24 : Commenters quoted Figures 4

- 14 in NERA's analyses of energy system impacts using scenarios covering all 4 building blocks and only using building blocks 1 and 2, such as increases in energy prices, capacity changes, increases in natural gas usage, increases in energy system costs by about $479 billion in present value terms over the period from 2017 through 2031, and increases in generation impacts.

Response 24 : The analysis referenced by the comment excludes new renewable energy and demand

- side energy efficiency from compliance. EPA’s analysis presented in the RIA reasonably includes new renewable energy and demand

- side energy efficiency, which are both allowable compliance measures

.

Comment 25: Residential Consumers Are Disadvantaged by EPA's Energy Efficiency Assumptions

Commenters stated that the proposal does not address the well

- established fact that EE measures undertaken in the res idential sector are considerably less effective on a dollar

- per

- KWh

reduction basis than those undertaken in the industrial and commercial sectors and instead, EPA erroneously applies one EE potential across the residential, commercial and industrial secto rs.
Commenters stated that Building Block 4 imposes greater burdens on rural electric cooperatives and that the proposed EE targets would result in member transmission and distribution cooperatives incurring additional cost per rural electric cooperative m ember/ratepayer. The commenters stated that G&Ts serve the poorest, most rural areas of the country and the household electric usage tends to be higher in rural areas. The commenters stated that the challenges to successful EE programs are further exacer bated by the large size of G&T service territories and many G&Ts serve one member per mile of transmission line or less making EE projects even more challenging.

Response 25 : The final rule does not include Building Block 4. See section V of the preamble.

Comment 26 : Commenters stated that several recent analyses have been conducted on the economic benefits of using efficiency to comply with carbon pollution standards in Iowa. The commenters identified several studies and reported the economic benefits. The commente rs stated that in addition to increasing the stringency of Building Block 4 by increasing Iowa's energy efficiency savings to 2% (from 1.0%

- 1.5% over several years) annually and71 incorporating building codes and other efficiency opportunities into Buildin g Block 4 target setting, EPA should also strengthen Building Block 4 by updating EPA's underlying cost data.

Response 26 : The final rule does not include proposed Building Block 4. See section V of the preamble.

Comment 27 : Commenters stated that by enc ouraging state governments to include nuclear power plants in their compliance plans, EPA would undermine the states' agility and resourcefulness in modernizing their electricity sectors to maximize carbon emission reductions and enabling grid resilience.

Commenters stated that EPA's proposed rule is arbitrary and capricious because it would reward aggressive bidding tactics and potential market manipulation by nuclear corporations that have intentionally over bid their reactors out of the electricity marke t thereby placing them at economic risk of shutdown. The commenters stated that stated that EPA's proposed rule seeks to preclude the shutdown of old and dangerous nuclear reactors. The commenters stated further that some nuclear corporations are intentio nally overbidding the cost of electricity from nuclear plants and are seeking to leverage the EPA rule to garner bailouts from their electricity
customers.

Commenters stated that nuclear corporations are gaming the electricity market and then turning
to their legislatures looking for a bail out of the nuclear units they intentionally over bid.

Commenters stated that regardless of whether nuclear corporations colluded to manipulate the electricity market, the EPA's proposed rule should not function so as to reward these aggressive bidding strategies and encourage a moral hazard. The commenters stated that the EPA's proposed rule would better abate CO2 if it dropped nuclear power from the equation all together and given the declining cost of renewables and the necessity of the U.S. becoming more efficient in our use of energy, EPA's proposed rule has failed to make the case that CO2 reductions require either new nuclear reactors or the bailout of old and dangerous reactors.

Response 27 : The EPA has decided not to finalized provisions that treated nuclear power differently from other low

- and zero

- emitting sources.

Comment 28: Commenters stated that electricity constitutes 80% of a refinery's energy input costs that NERC's analysis of the costs of the propo sed rule estimates the price of electricity for industrial consumers will increase by 22% and will extinguish the profitability of most small and medium

- sized refineries.

Commenters stated that a shift from coal to natural gas for electric generation furth er exacerbates the problem of increased electricity costs. The commenters also stated EPA has not included in its cost calculus the increased costs of refinery products associated with higher natural gas prices that will result from its proposal nor has EP A included the costs of rolling blackouts and full blackouts. The commenters stated further that EPA has not discussed the lack of natural gas72 pipeline capacity or the lack of reliable natural gas supply in cold. The commenters also noted that because the electric grid in Texas is not well interconnected to the rest of the nation and because natural gas pipeline capacity into Texas is insufficient, analysis of the proposed rule should have examined the impacts of the rule on Texas refineries.

Commenters st ated further that proposed rule will directly injure the small and medium

- sized refinery industry and the rule is fatally flawed (as discussed elsewhere in the commenters arguments), cannot be fixed, and unless withdrawn, EPA's actions will cause the refin ery industry fatal injury.

Commenters stated that the impacts of natural gas prices and availability must also be included and have a huge impact on their industry (fired kilns). The commenters stated that they fear it will affect demand and therefore pri ces and possibly availability as well as changes in the Ozone Rule, which will also affect natural gas and availability.

Commenters stated that many businesses and industries will be directly affected by EPA's Clean Power Plan (CPP) rulemaking proposal. T he commenters stated that they will be impacted by the CPP because energy is a critical business input and that for many businesses and industries who compete in the global economy, energy represents a major input cost that can ultimately determine both vi ability and profitability. The commenters stated that energy is a competitive advantage for many in large part because of the abundant and diverse supplies of affordable
energy resources.
Commenters stated that they do not support EPA's decision to regulat e greenhouse gas emissions under the Clean Air Act (CAA) or the regulatory overreach that EPA has embarked upon with its proposed Clean Power Plan (CPP).

Commenters stated that deep concerns with the uncertainty being generated by EPA's CPP and the expansi ve scope and reach of the CPP into areas that extend well beyond EPA's rulemaking authorities. The commenters expressed grave reservation at the substance of the CPP from the perspective of the impact on their respective business operations and has the fo llowing comments: 1) the US EPA Clean Power Plan is an overreach of that federal agency's authority and unworkable as written, and 2) the Clean Power Plan, as proposed, fairly spreads the burden of reducing CO2 emissions among the states. The commenters s tated that the CPP will pose significant business risks to their operations. The commenters stated that these risks are associated with the clear potential for impacts on energy prices and reliability that, in turn, will impact the viability of business op erations.

Commenters stated that energy costs are currently an advantage for the forging industry in large part because abundant and diverse supplies of energy resources are helping to keep energy costs reasonable and supply reliable. The commenters stated further that EPA's proposal would reduce the energy options available to everyone, resulting in increased volatility and cost and threatening reliability, ultimately making all U.S. manufacturing less competitive.

Commenters stated any Clean Power Plan sh ould only be undertaken after full consideration of the impacts to the people and businesses that will bear its compliance costs and reliability risks.73 The commenters stated that the Proposed Regulation, as currently drafted, presents many cost, reliabilit y, and legal concerns.

Commenters stated that they share several of the concerns their trade groups raise if the rule is finalized as proposed. The commenters stated that increased energy costs adversely can affect their competitiveness, particularly globally, creating uncertainties for the jobs and other economic and social benefits our operations provide.

Response 28 : Commenters asserted that the CPP will have adverse impacts on secondary markets such as petroleum refining due to the increased busin ess risk associated with potential increase s in electricity and natural gas prices and possible electricity reliability impacts. EPA disagrees with commenters assessments of the reliability risks associated with the CPP. Please see the Resource Adequacy and Reliability Analysis TSD and section 8.9 of this response to comment document for more information regarding EPA’s assessment of resource adequ acy and reliability

. EPA addresses potential energy market changes that may result from the CPP in chapter 3 of the RIA. Potential impacts for seco ndary markets such as industrial consumers are discussed in chapter 5 of the RIA. On average nationwide, EPA estimates that electricity prices will not change or increase less than 1 percent by 2030 from level s that w ould occur absent the CPP. Estimates for different regions of the country and for industrial consumers that negotiate electricity rates may differ from these nationwide averages. Natural gas prices are estimated to range from a decrease of about 2 percent to an increase of 2.5 percent in 2030 depending on the illustrative control scenario evaluated. The EPA notes that the estima tes of potential price changes in elec tricity are significantly lower than those asserted by the commenters. Impacts to particula r industrial consumers will depend upon a variety of factors that are discussed in chapter 5 of the RIA. The price change estimates are based upon the illustrative contro l scenarios evaluated by EPA . States will develop implementation plans that may differ f rom those projected by EPA and states will have the flexibility to consider circumstanc es relevant for their particular

areas of the country in the development of those implementation plans

.

Comment 29 : Commenters stated that the proposed rule creates a jurisdictional conflict between USEPA and FERC. The commenters stated that the Federal Power Act empowers FERC to look at just and reasonableness when reviewing wholesale electric rates and market construct designs under RTOs, yet SIPs would be created t o comply with the USEPA Section 111(d) standards with authority under the CAA. The commenters added that FERC currently reviews and approves tariffs for necessary stop gaps to ensure reliable electric supply, which may conflict with limitations or retireme nts due to CO2 reduction targets within an approved state plan.

Commenters added that the alternative assignment of responsibility under the portfolio approach would place responsibility for achieving the state goals solely on the affected EGUs, and that Michigan must acknowledge the potential reliability issues in meeting future electric demand due to the closure of coal plants related to various USEPA rules. The commenters noted that MISO has determined a 3 gigawatt shortfall in generating capacity for w hat is needed for reliability and that NERC raised serious concerns about the proposed rule's impact on reliability.74 Commenters stated that the proposed rule creates inequities among the states, as different state goals will lead to differing implied carbo n costs, which will flow through to electricity prices and that for the industrial sector, these inequities will lead to carbon leakage and trade exposure both within and beyond the U.S. borders.

Response 29 : EPA disagrees with these comments. The final rule will not conflict with FERC jurisdiction or regulations. Commenters raise concerns about the final rule and FERC jurisdiction over grid reliability and wholesale market dispatch. There concerns are simply not valid; EPA regulations have successfully coexisted with FERC regulations to ensure that grid operations are both secure and environmentally sound, and will continue to do so under this rule. Contrary to these comments, the final rule is entirely consistent with continuing operation of security constrained economic dispatch in FERC jurisdictional markets, and does not prescribe anything resembling economic dispatch. On the contrary, the final rule assumes planning for transmission will occur along the lines of FERC transmission planning regulati ons, such as Order 1000, which provides planning mechanisms to incorporate public policy initiative like this final rule.

EPA also relies on FERC designated or regulated entities, such as NERC and the Reliability Authorities, to provide information and ass istance in ensuring that state planning considers reliability. EPA works closely with RTOs in implementing current EPA regulations such as MATS and expects to have a continuing coordination during the implementation of this rule. EPA has carefully conside red reliability in the development of this rule, and does not believe there are conflicts between the rule and reliability.

Comment 30 : Commenters stated EPA's Clean Power Plan infringes on Montana's long term resource planning citing the 1992 Energy Policy Act section 111(d)(19). The commenters stated IRP planning unquestionably falls on Montana's side of the "bright line" dividing state and federal jurisdiction over the electric industry. The commenters stated IRP planning is a process by which many states decide on which power sources they will rely, and, pursuant to the Federal Power Act, the federal government "shall not have jurisdiction over facilities used for the generation of electric industry." 16 U.S.C. section 824(b)(1). As an example where federal energy regulators have disavowed any authority over a state's IRP process, the commenters referenced the FERC's landmark 2011 Order 1000 which included a disclaimer that "nothing is intended to preempt or otherwise conflict with State authority ov er integrated resource planning and similar processes." In contrast, the commenters stated EPA's Clean Power Plan expressly subsumes state IRP planning within the agency's regulatory ambit and cited the preamble of the proposed rule. The commenters stated to date, Montana utilities have performed integrated resource planning under the aegis of the Public Service Commission, which traditionally has judged utility IRPs based on reliability and affordability, free from federal government intrusion. EPA's Clea n Power Plan would effectively commandeer this process, the Clean Power Plan would force the Public Service Commission to oversee utility resource planning in order to further the agency's climate change goals rather than the state's goals.

Response 30 : EP A disagrees with this comment. The final rule does not conflict with state resource plans; as we state in the final rule p reamble section V.C , states will be able to continue75 to develop those plans under the framework of the final rule. IRPs have histori cally incorporated environmental regulations in their planning, and nothing in the final rule will inhibit their continued ability to do that.

Comment 31 : Commenters stated that in addition to the coal

- fueled plants and generating stations that will be s hut down between 2016 and 2020 due to its Clean Power Plan, other power plants will retire between 2010 and 2020, for a total loss generation that could power 60 million homes due to other recent regulations and factors.

Response 31 : The EPA is aware of cl osures that have occurred since 2010 and are expected to occur by 2020, and accounts for these closures in our analysis of the rule.

Comment 32 : Commenters stated that their organization urges the EPA to formally require states to include transmission int erests in the state implementation planning processes, so that technical and reliability impacts of changes such as voltage, thermal, and deliverability concerns are adequately considered. The commenters stated that the views of ISO and RTO experts in the formulation of state or regional plans needs to be clearly expressed in any forthcoming rules.

Commenters stated that the transmission sector should be involved in the compliance process because identifying the transmission expansion options necessary for dispatching more natural
gas

- fired generation (Building Block 2) and interconnecting and more efficiently accessing renewable resources (Building Block 3) are central to the CPP. In addition, the commenters stated that State and regional resources can be instrumental in accelerating the formulation of state plans and in ensuring that the key transmission sector is included as a likely participant in reducing emission under three of the four Building Blocks.

Commenters stated that EPA should allow state co mpliance plans to realistically reflect the significant amount of time and resources that will be required to plan, site, permit, and bring these facilities into service in the interstate, bulk power markets.

Commenters stated that EPA cedes development of the state implementation plans to environmental agencies, including state air offices. The commenters stated that EPA has an important stake in ensuring that state plans are founded on an understanding of the technical requirements of the grid and not (at least entirely) on the resource preferences and utility cultures of individual states. The commenters stated that the end product of an integrated approach in planning can be a superior and more efficient approach to achieving the EPA's goals if EPA

ensu res reliability and economic regulatory expertise is enlisted in the effort.

Response 32 : Each state must demonstrate as part of its state plan submission that it has considered electricity system reliability issues while developing its plan. See section V III.D.2.a.(7)(d) of the preamble to the final rule. Electricity system reliability considerations for state plans are discussed in detail in section VIII.G.2 of the preamble to the final rule.76 The EPA has extended the beginning of the first plan performan ce period until the 2022. This, along with the multi

- year interim and final plan performance periods, and the flexibility provided a state to implement different plan approaches based on the considerations in the state, will help address any potential elec tricity reliability concerns.

As discussed in section VIII.E, state plans are submitted by the governor of a state or her or his designee. As a result, a state can involve multiple state agencies in the development of a state plan, at its discretion.

C omment 33 : Commenters stated that by limiting the amount of coal that could be used for electricity generation in each state, the Proposed Rule would place substantial burdens on the interstate transportation of coal to states throughout the country.

Respo nse 33 : The final rule does not impose a limit amount of coal that could be used for generation in each state.

Comment 3 4: Challenges for rural providers.

Commenters stated concerns about the challenges the rule will pose for rural providers of electricity. The commenters stated that many rural generators are consumer

- owned, not

- for

profit, and were constructed at a time when federal energy policy encouraged coal generation which make them especially vulnerable to the proposed rule. The commenter s cited the National Rural Electric Cooperative Association's (NRECA) prediction that the rule as proposed could result in premature closures, leading to increased demand and higher rates from the ones that remain. The commenters further stated it is waste ful and unfair to force this regulatory burden onto the country's rural communities because family farmers and ranchers could make more substantial contributions to climate change mitigation while preserving their economic well

being through emission offse ts and full RFS volume targets.

Similarly, commenters stated EPA did not account for the not

- for

- profit nature of rural electric cooperatives and rural public power districts in which the consumer

- owners bear all costs of generation and compliance with EPA regulations through their rates. The commenters stated expressed concerned that the plan does not have an economic safety valve or cost containment guidelines that would mitigate impacts to small utilities and their customers in the event that the
costs t o comply are much greater than anticipated or have a significant negative impact on electric generation markets.

Commenters stated they are troubled about the impact the existing source proposal would have on the reliability of the electric grid on rural p roviders such as cooperatives and that the proposal would jeopardize reliability by reducing the overall amount of power generation available at times of peak use. The commenters indicated that the proposal would force early retirement of many coal

- fired power plants by making it economically unviable for those plants to remain in operation. The commenters indicated that if EPA pushes forward with the proposal, it may make77 it difficult for rural electric cooperatives to meet the demands of their customers , particularly during bouts of extreme heat or bitter cold.

Commenters stated that rural electric cooperative members pay a disproportionate price for energy, regulatory policy, which drives costs higher. The commenters stated that they know what the havoc such regulation is going to have on the households in my area, and encourage withdrawal of the rule, to evaluate more measures that are affordable, achievable, and reasonable.

Commenters stated that serving its load from low cost coal units and not prima rily NGCC is essential and most G&Ts does not own sufficient natural gas generation to serve its member load. The commenters stated that Building Block 2 re

- dispatch simply forces them into the MISO spot energy market. The commenters stated that MISO pro jects that the CPP will result in a capacity deficit and generating resources will not be sufficient to serve peak demand. The commenters stated further that shifting energy sources from coal

- fired generation to NGCC and RE will create a financial hardshi p on end users of electricity, a hardship that will be borne by those who already face significant economic difficulties.

Commenters stated that shifting energy sources from coal

- fired generation to NGCC and RE will create a financial hardship on end user s of electricity, a hardship that will be borne by those who already face significant economic difficulties.

Commenters stated that EPA's cost/benefit calculations take credit for phantom benefits and overstate cost savings from EE to reach the conclusion that electricity bills will be reduced eight percent by the CPP and that these rate increases will have real health impacts in rural service territories. The commenters stated that in rural service territories, rate increases result in service disconnect ion, voluntary underservice, use of alternative heating and other energy options like woodstoves with immediate impacts on human health as compared to CO2 reductions which have a questionable future impact on human health.

Commenters stated that Energy Ven ture Analysis (EVA) also evaluated the impact of the CPP and the annual residential electric bill in 2020 will increase 31% over the cost of a 2012 electric bill.

Commenters stated that a study conducted by NERA Economic Consulting of the proposed CPP
on t he U.S. Energy System looked at the economic impact of the CPP and found that it will drive up electricity prices which will have the most significant impact on those who already struggle to make ends meet. The commenters stated that NERA's figure omits se veral cost factors, such as infrastructure, pipelines, transmission, voltage support and ancillary services, will add to the impact and cost of the CPP.

Commenters stated that NERA concluded that for the period 2017

- 2031, assuming all four "Building Blocks " are used, to achieve an average of 22 percent reduction in CO2 emissions 45 GW of coal units will be retired resulting in a 29 percent decline in coal

- fired generation. The commenters stated that natural gas generation will only increase about five perc ent on average and the price of natural gas would increase about two percent on average. The commenters stated further that if the energy sector only employs Building Block 1 and 2, 169 GW of coal78 units would be retired, natural gas prices would increase on average by 29 percent, and NERA projects that nationally the cost of delivered electricity would increase by 17 percent. The commenters stated that it is noteworthy that NERA's figure omits several factors, (including infrastructure, costs related to na tural gas pipelines, electricity transmission, voltage support and ancillary services, costs associated with cycling coal plants, permitting delays) that will add to the impact and cost of the CPP.

Commenters stated that the CPP violates the RE Act's fede ral mandate that rural America receive reliable, low cost electric services because the proposed plan will essentially require either the significant reduction in the operation of or retirement of nearly all coal

- fired generation units. The commenters stat ed that CPP's CO2 emissions goals will prevent them from generating sufficient power to continue to provide affordable and reliable service and EPA does not address or resolve this concern. The commenters stated that as proposed, the CPP will disproportion ately adversely impact rural electric cooperatives and the CPP is unworkable, unachievable and illegal.

Commenters stated they have no natural gas combined cycle power plants for fuel switching, and they are unsure how this will impact their future operati ons if mandated to reduce our coal generation. The commenters said if the state is able to achieve the CPP goals by other participating utilities with NGCC plants, there is some uncertainty what financial or operational impacts will fall on utilities witho ut the means for fuel switching.

Response 3 4: The EPA disagrees with these comments. See response to comment 30 in section 8.5. Regarding the safety valve, see preamble section VIII.G.2. Regarding the impact analysis of the final rule, EPA’s estimate of costs and benefits are reasonable, as discussed in the RIA. See chapter 3 of the RIA for projections of retail price impacts, which the EPA estimates will be less than one percent in 2030.

Comment 3 5: Commenters stated that if we have a reliable energy source, we have natural gas that's going to help us with manufacturing, but why limit our energy sources, why eliminate the base load for the electric grid? The commenters stated that this seems like economic suicide for this country. The commenters stat ed further that we should try to have energy independence and not rely the Middle East for our energy needs. The commenters wondered what position we would be in and what would happen to our national security if we eliminate coal.

Commenters stated that l egislation in Pennsylvania placed an energy portfolio on the books that required electric distribution companies to adopt plans to reduce energy demand and consumption within their service territories. The commenters stated that they are taking the right steps despite having the energy portfolio in place, but following the proposed rules would completely eliminate coal or significantly eliminate coal from the portfolio. The commenters noted that DEP (Department of Environmental Protection] testified that if the state follows the proposed rules, that by 2030, over 70 percent of coal consumption levels will decrease by over 70 percent and go from 33 million tons to about 10 million tons. The commenters further noted they will go to a coal utilization rate of about 17 percent at the power plants, and believes there will be a lot of unintended consequences associated with this plan.79 Response 3 5: The EPA does not project that the final rule will limit energy sources or eliminate coal

- fired generation. See Chapt er 3 of the RIA.

Comment 3 6: Commenters stated that by their own experience in reducing its fleet's carbon intensity without prompting by any of the impending actions under section 111 of the Clean Air Act, natural market forces over time lead to the effi ciency gains (and displacement of fuel

- using technologies) that reduce GHG emissions, market forces that could be disrupted as an unintended consequence of the rules as proposed.

Commenters stated that EPA reports that the reduction of CO2 emissions under the Clean Power Plan is equivalent to 30 percent cut over 2005 emissions. However, EPA proposal gives no credit to states that already have reduced CO2 emissions due to market driven forces such as increased natural gas use, the retirement of older coal g enerating plants, and construction of new nuclear generation. The commenters stated further that since 2005 CO2 emissions from all fossil fueled plants have decreased by 13 percent, with many states highly dependent on coal

- based generation having already achieved significant emission reductions but still facing additional burden of further reducing their CO2. The commenters further stated that the stringency of the stated reduction goals will have the effect of dictating for the first time how states regu late their generation and use of energy.

Commenters stated that the retirements of 41 to 49 gigawatts of coal generating capacity due to the rule are in addition to the 92 gigawatts of coal capacity that EPA is already projecting will shut down between 201 2 and 2020 in large part to compliance with 2012 mercury and air toxic rules. The commenters added that they believe that losing around 130 gigawatts of base load coal capacity, nearly 40 percent of the nation's coal generation fleet in 2012, raises serio us concerns for the future reliability of our electric power supplies and reliability concerns would no doubt become more urgent as existing base load nuclear units begin to retire upon the expiration of their already extended NRC operating licenses.

Comme nters stated that for every coal plant that is retired prematurely because of the CPP, ratepayers will be forced to pay not only for the life that was remaining in the coal plant, but they also will pay for the replacement power plant so ratepayers will be paying roughly double for the same generation capacity. The commenters further stated that increases in costs for natural gas and for new infrastructure also are likely due to supply and demand constraints as a majority of the nation's coal plants are for ced to shut down and replaced with new natural gas plants in a relatively short time period. The commenters further stated that those utilities that are able to obtain the infrastructure may be required to pay a significant premium.

Commenters stated EGUs in states that do not require reductions in emissions from these facilities would have a competitive advantage vis

- a

- vis EGUs in states that do directly regulate emissions from these sources. The commenters stated that if market

- based approaches are imple mented by some states but not all, or if the market

- based approaches are not harmonized, the disparate carbon prices internalized in operating costs for generators across states would again result in a shift in generation and emissions to the state with re latively lower carbon costs. The commenters stated further that new resources would face lower operating costs in states that80 do not regulate these sources under their CPP implementation plans than in states that do and developers would thus have a strong incentive to site new fossil generation in states that do not include new resources in their implementation plans.

Commenters stated individual states may prioritize in

- state emission reductions without consideration of the impacts on the broader regional electrical grid across multiple states and that distortions in power markets due to variations in GHG compliance costs faced by generating units in different states could create 'seams' issues across state lines and among balancing areas.

Response 3 6: Rega rding the 2012 baseline for the final rule, see section V of the preamble. Regarding reliability concerns related to retirements, see Section VII I .G.2 of the preamble.

See section 5.11 of this document for EPA’s response to comments relating to stranded assets.

Regarding the concern that relying on state

- specific goals and state

- by

- state planning could introduce complexity into the otherwise seamless integrated operation of affected EGUs across the multi

- state grids on which system operators, states and u tilities currently rely and intend to continue to rely, see preamble section I.

Comment 3 7: Commenters stated they have no quarrel with the objectives of the proposed rule, but have significant concerns of how we get there. The commenters further stated they are concerned that the proposed regulations will greatly disrupt our manufacturing econ omy through
state

- to

- state disparities, higher electricity prices, price volatility, and grid destabilization. The commenters stated that coal provides affordable, reliable base load power and expressed concern that the regulations will have enormous impac ts on coal

- fired power.

Commenters noted that although the proposal does not mandate any single method for meeting the CO2 target, it clearly directs states to adopt energy policies that shift electricity generation from coal to other sources such as rene wables. At the same time, the commenters recognized the role that renewable resources can and should play. The commenters stated that these early actions are being used to support more aggressive targets for increasing amounts of renewable energy deploym ents in generation in the proposed rule and that nearly every Great Lakes state will need to at least double its deployment of renewable energy by 2029 from its 2012 levels, with Ohio and Pennsylvania having to increase theirs by nearly eight

- fold, making these targets very difficult to meet and illustrate the uneven impacts of the proposed rule.

Commenters noted another troubling area is the 1

- 1/2 percent annual reduction target for energy consumption by state. The commenters stated that EPA believes that a 1

- 1/2 percent savings from efficiency policies is achievable but seems to be discounting the fundamental connection between economic growth and energy consumption. The commenters stated that as the state's economy improves, so too does energy consumption , which can lead to increased CO2 emissions and asked if the state be penalized if it has worked hard to build a growing economy.

Commenters stated EPA's Proposal would place grid reliability at risk while increasing energy costs and inflicting significant economic damage on Arizona communities.81 Commenters stated that the proposed CPP contains CO2 emission "goals" for each state plan to meet, but in reality, these "goals" are state

- by

- state emission caps. The commenters stated that Kentucky will be forced t o fundamentally alter the way energy is produced, priced, and consumed, and that conservative estimates are that the CPP would result in 14% to 17% increases in retail electricity prices for Kentuckians, which is not an acceptable outcome.

Commenters state d that power generation and capacity availability including Arizona's coal

based generation plays a significant role not only in the supply of electricity but is an integral part of the State's economy. The commenters stated that in recent years, coal gen erating facilities have been upgraded at a cost of hundreds of millions of dollars for additional generating capacity and required compliance related upgrades.

Commenters stated that a white paper examined the disproportionate financial harm to single

asse t coal

- fired plants that would not be able to take advantage of emission rate averaging or a trading approach under the Proposed Rule. The commenters stated that merchant coal

- fired generators would be adversely impacted by a rule similar to the Clean Pow er Plan because such generators will likely have few choices to reduce CO2 emissions, resulting in increased costs and decreased revenue.

Commenters stated that electricity energy demand growth has been declining since the 1950s, and this is not frequently discussed (average U.S. electricity demand growth was 9.3% in the 1950s, 7.4% in the 1960s. 4.4% in the 1970s, 2.8% in the 1980s, 2.4% in the 1990s, and only 1.0% from 2000 to 2010. The commenters said the EIA projects 0.7% electricity demand growth for the future, and in more recent years declining sales volumes are tied to a weak U.S. industrial economy, increased energy efficiency and conservation, especially in industry, slow, but steady growth in combined heat and power (CHP), along with any of the s ignificant new impacts from customer owned (DG) behind the energy meter.

Commenters stated nearly a quarter of the nation's coal power generation capacity could shut down by 2035, according to the GAO (13) who stated the power industry could retire betwee n 15 percent and 24 percent of its coal

- fueled power generation capacity over the next 22 years. The commenters said the GAO report notes the two big trends affecting power company decision

making are the changing environmental regulations and shifts in th e market conditions such as the decrease in the price of natural gas, and also points out the EPA has documented that coal used to generate electricity is associated with health and environmental concerns such as emissions of sulfur dioxide, a pollutant li nked to respiratory illnesses, and carbon dioxide, a greenhouse gas. The commenters said the coal's share to electrical generation nationwide has dropped from 50 percent in 2002 to 42 percent in 2011; the combination of 50 years of energy demand decline an d coal plant closures is a very significant pressure point on the traditional electric utility model.

Commenters stated the utility business model is out of date

- the money comes from sales of commodity electricity and measured by how much the utility ha s in capital assets

- in the transformed utility world, success should come from the provision of services measured by the delivery of real value versus low interest sunken assets. The commenters said utilities have also

over

- built capacity based on specul ation that electricity demand could grow which makes some facilities uneconomical. The commenters said new air emissions regulations which utilities must82 meet through expensive redesign or rebuild of plants and cheap natural gas putting further
pressure on uncompetitive coal plants lead to plant closures as these coal units shift from assets to liabilities.

Commenters stated the issue of utilities constrained by rules and regulators setting their prices are what public policy must address going forward as t he last decade has seen the rise of small

distributed generation companies, especially in the PV space, including bringing in new third

party vendors that can lease DG equipment to a homeowner and business. The commenters said some states basically prohibi t third party energy vendors and in other states the utilities feel constrained from competing directly with companies taking away their customers. The commenters said third party distribution and net

- metering laws are now subject to political power debate s in several states, and net metering has been used as a policy instrument to encourage development of locally

- produced renewable electricity connected to the electric grid.

Response 3 7: Regarding the technical achievability of the level of renewable generation in BSER, see preamble section V.E. and the GHG Mitigation Measures TSD.

The EPA is not including the proposed building block 4 in the BSER in this final rule.

The EPA projects that the final rule will have minimal impacts on retail electricity p rices. See Chapter 3 of the RIA.

Regarding merchant generators, the EPA’s analysis shows that all types and sizes of affected EGUs in all locations are able to undertake the actions described as the BSER. See section V of the preamble.

Comment 3 8: Comme nters stated that States should assign lower priority to alternatives that produce high environmental burdens and health risks in the aggregate, including fuel switching to natural gas, nuclear energy, and so called "more efficient" coal combustion. The co mmenters stated several arguments related to environmental justice issues.

Commenters stated that a recent study indicates that gas from hydraulic fracturing will not contribute in a meaningful way to the reduction of greenhouse gases and some of the analy ses demonstrate that hydraulic fracturing may actually add to the carbon inventory. The commenters identified several environmental justice issues associated with hydraulic fracturing and that environmental justice communities will bear the burden of gas development.

Commenters stated that they urge EPA to remove nuclear energy from the rules altogether and that the preservation of nuclear capacity should not be included in the building blocks, nor should it be permitted as a compliance option. The comment ers stated three are such perpetually unresolved issues as nuclear waste disposal, uranium mine pollution, and remediation. The commenters stated further that nuclear waste storage is another issue that directly affects environmental justice communities a nd Native American tribes in Nevada claim that Yucca Mountain is sacred land and have voiced their concerns throughout the past decades about nuclear waste being stored there. The commenters also stated that nuclear waste sites tend to be sited near margi nalized populations that have difficulty finding a voice in decision making.83 Commenters stated that while shifting to more efficient coal combustion may be a better alternative than current coal

- fired power plants, the total environmental burden of coal re mains the same. The commenters stated that in addition to health effects and environmental burdens placed on environmental justice communities, coal combustion is not economic and that recent air regulations issued by EPA, combined with the fact that most of the coal

- fired generation is approaching retirement, make the construction of new coal plants inefficient.

Commenters stated that continued reliance on fossil fuels hampers the development of a clean energy economy and that market barriers and failures operate to limit the development of renewable energy due to commercialization barriers, price distortions, devaluing public benefits, inadequate information, high transaction costs, and clout by larger companies.

Response 3 8: As t he EPA h as outlined in se ction IX of th e final rule preamble

, a ctions are in place to ensure that vulnerable communities are not disproportionately impacted by this rulemaking. Additionally, in section IX

. X. J

. of the final CPP preamble the agency describes how it addressed environ mental justice considerations in this rulemaking. Furthermore, the EPA cannot provide a response to the comment regarding the impacts of hydraulic fracking on communities as it is outside the scope of the CPP.

Regarding emissions from gas development, see RIA Appendix 3A.

The EPA has decided not to finalized provisions that treated nuclear power differently from other low

- and zero

- emitting sources.

Regarding the inclusion of fossil generation in BSER, see section V of the preamble.

Comment 39 : Commen ters stated the CPP Is Likely to Be Extraordinarily Costly

Commenters stated that the CPP will massively increase the price of electricity in Indiana, negating the supposed benefits of the proposed rule. Commenters stated that according to the U.S. Energy Information Administration, Indiana currently derives most of its electricity from coal

- fired power plants. Commenters stated that as a result of carefully planned, environmentally

- conscious investments made by Indiana businesses and taxpayers, Hoosiers al so enjoy some of the lowest overall electricity prices in the country. Commenters stated that the CPP would result in a large number of coal

- plant retirements in the near

- term, leaving Indiana manufacturers and households to foot the bill for electricity f rom other sources.

Response 39 : The projected impacts of two illustrative compliance scenarios are presented in the RIA. The EPA projects small increases in retail electricity rates, and decreases in electricity bills.

Comment 40 : Commenters stated that 111(d) implementation could conflict with FPA requirements.84 Commenters stated that once EPA approves Indiana's 111(d) Plan, the Plan will be federally enforceable. Commenters stated that at that point, plant owners and operators will be liable under the CA A for failing to operate in accordance with the terms of Indiana's Plan. Commenters stated that the Federal Power Act ("FPA") empowers the Secretary of Energy and FERC to order power plants to operate if doing so is necessary to preserve bulk power reliab ility. Commenters stated that were the Secretary of Energy or FERC to order an IUG member to operate a plant in a manner that violates Indiana's 111(d) Plan, that company might be either violating 111(d), or putting the reliability of the grid at risk and risking an enforcement action. Commenters stated that eventually, the courts will have to decide, but not before consumers of electricity and power providers bear the costs of all this legal confusion.

Commenters stated that given the aforementioned failu re by EPA to consult with FERC or other entities charged with maintaining bulk power reliability in the process of writing the proposed rule, EPA should exclude Building Block 2 from consideration until the agency is able to address these concerns.

Respon se 40 : EPA disagrees with these comments where they suggest a conflict between FERC and this final rule. The final rule will not conflict with FERC jurisdiction or regulations. Their concerns are simply not valid; EPA regulations have successfully coexis ted with FERC regulations to ensure that grid operations are both secure and environmentally sound, and will continue to do so under this rule. Contrary to these comments, the final rule is entirely consistent with FERC regulation and continuing operation of security constrained economic dispatch in FERC jurisdictional markets, and does not prescribe anything resembling economic dispatch. State plans On the contrary, the final rule assumes planning for transmission will occur along the lines of FERC trans mission planning regulations, such as Order 1000, which provides planning mechanisms to incorporate public policy initiative like this final rule.

Comment 41 : Commenters stated that rule should not minimize the use of Coal, which is a cost effective source.
Commenters stated that implementation would dramatically reduce use of coal, an abundant resource of low

- cost energy that has helped to keep electricity and natural gas costs low. Commenters stated that coal is needed in the mix of generation energ y alternatives to provide diversified, stable, and reliable base load energy, to provide voltage support, to provide one of the few sources of on

- site "stored" energy in the supply mix, and to compete economically with natural gas. Commenters stated that w ith a significant reduction of coal in the mix, as natural gas prices rise, it will substantially drive up electricity prices.

Response 41 : EPA disagrees with these comments. As discussed in Chapter 3 of the RIA, the EPA does not project a dramatic reduc tion in the use of coal.

Comment 42 : Commenters stated that rule increases use of natural gas with more volatile availability and cost.85 Commenters stated that implementation would dramatically increase dependence upon a single fossil fuel, natural gas. C ommenters stated that natural gas availability and prices have a long history of volatility. Commenters stated that according to the Energy Information Administration (EIA), coal has a 300

- year supply. Commenters stated that natural gas on the other hand, has only a 59

- year supply at 2025 demand, according to the AEO 2014. Commenters stated that EIA says that proven reserves are only 9.6 years of supply at 2025 demand. Commenters stated that it is also troublesome, that EIA forecasts Henry Hub prices to inc rease by 76 percent by 2025 as compared to 2013, which means that electricity prices will also rise substantially.

Response 42 : EPA disagrees with these comments. See Chapter 3 of the RIA for projected impacts on gas price, and Chapter 3 of the GHG Mitiga tion Measures TSD.

Comment 43 : Commenters stated that they support alternative (wind) source

Commenters stated that in 2011, Texas suffered through the worst one

- year drought in its history. Commenters stated that demand for electricity was at an all

- tim e high because of the heat, and the water needed to cool the state's power plants was in short supply. Commenters stated that in some places, water levels had dropped below intake pipes; in others, the available water was too hot to provide effective cooli ng. Commenters stated that Texans were warned that rolling blackouts were possible. Commenters stated that in the end, ERCOT, the grid operator, met demand without blackouts, though it came close. Commenters stated that a key factor in keeping the power fl owing during the drought was that Texas had been aggressively developing wind power. Commenters stated that currently, Texas generates more power from the wind than any other state. Commenters stated that wind is a power source that requires no water, unli ke coal.

Commenters stated that we see that coal generation declines by one

- third while gas generation grows by 12 percent and wind generation quintuples. Commenters stated that by 2030, about

one

- third of total generation could be from wind. Commenters stated that these numbers for wind growth might seem extreme, but peak wind integration numbers for ERCOT jumped from 17 percent to 30 percent between December 2011 and December 2013. Commenters stated that the potential for relatively inexpensive wind in Texas is multiples of future projected demand, and ERCOT expects that future capacity increases will primarily be wind. Commenters stated that as wind uses no water and releases no CO2, we find that water conservation and GHG mitigation in Texas looks fav orable. Commenters stated that the new rules won't require Texas to make extraordinary adjustments to meet the targets. Commenters stated that because of the addition of end

- use energy efficiency, demand is lower by 10 percent by 2029. Commenters stated th at coal power drops further to just 56 percent of the 2012 number. Commenters stated that with less demand, wind and gas generation grow less than the baseline.

Response 43 : Thank you for your comments.

Comment 44 : Commenters stated that implementation will lead to higher energy costs86 Commenters stated that robust and comprehensive study of the potential electricity sector and broader economic impacts of the rule is necessary, but it does not take such an analysis to understand that a regulation of this scope and magnitude will negatively impact American families and businesses. Commenters stated that as the Wall Street Journal noted in a recent editorial, "it is impossible to raise the price of carbon energy without also raising costs across the
economy . Commenters stated that the costs will ultimately flow to consumers and businesses."

Response 44 : See Chapter 3 of the RIA for a discussion of projected electricity price and electric impacts.

Comment 45 : Commenters stated that rule requirements will lea d to shut down of existing plants before replacement generation facilities can be built.

Commenters stated that they support the North American Electric Reliability Corporation (NERC) comments in its Initial Reliability Review, dated November 2014. Commen ters stated that if the Building Blocks are based upon conclusions that are not accurate, then additional renewable energy generation and reductions through energy efficiency efforts in building blocks 3 and 4 will be required. Commenters stated that devel oping suitable replacement generation will take time. Commenters stated that compliance with the overall reduction goals could require additional shut

- down of fossil

- fuel generating plants leaving an absence of electric generating facilities and the abilit y to meet demand, most especially to meet reserve margin requirements.

Response 45 : EPA disagrees with this comment. See discussion of glide path and 2022 start date in the preamble to the final rule.

Comment 46 : Commenters stated that costs of rule implementation are underestimated.

Commenters stated that the EPA's projection of annual incremental compliance costs of the proposed rule understates the likely disruption to the national economy, negative impact on energy system reliability and adverse i mpacts to U.S. energy security. Commenters stated that

a North American Electric Reliability Corporation Economic Consulting study found that the Proposal's options would result in a 12

- 17 percent increase in electricity prices.

Response 46 : EPA disagrees with this comment. See Chapter 3 of the RIA for a discussion of the projected costs of the final rule.

Comment 47 : Commenters stated that rule does not acknowledge impacts on transmission.

Commenters stated that for them, about 38% of the current generation capacity is from coal. Commenters stated that their units are geographically situated adjacent to each other. Commenters stated that shuttering both plants, if in effect required to be retired87 prematurely, may cause an imbalance in their grid and a remedy would require long term planning for replacement and stabilization.

Commenters stated that the CPP fails to capture any aspects of transmission base case constraints, not to mention co ntingency based constraints, and is thus not workable in a practical

sense. Commenters stated that if the EPA's final approach with the CPP continues to consider the entire bulk electric system as the BSER "system", it must factor in all of the practical a nd real

world constraints associated with that "system".

Commenters stated that the electric transmission system consists of multiple voltages and transfer capabilities that have evolved over the years based on the normal transmission flows and location of generation resources. Commenters stated that the electric transmission system has been built, analyzed, and upgraded all based on this mode of operation. Commenters stated that the System has been studied and operated in accordance with all applicable NE RC standards that provide acceptable reliability to our customers. Commenters stated that all this work and effort has been based on a transmission system with long term fixed resources and resulting flows.

Commenters stated that as large generation res ources are displaced by other resources, the transmission flows may be altered significantly. Commenters stated that it is entirely possible that the transmission system that previously met all NERC standards would no longer be in full compliance nor wou ld it provide acceptable reliability to our customers. Commenters stated that the transmission system may require modifications to existing facilities or the addition of new facilities to be fully compliant and provide an acceptable reliability at addition al cost.

Commenters stated that complex issues such as generation planning, permitting, construction and stability of the electric grid, forced by retirement or redispatch, are outside the jurisdiction of EPA, or at least they have been before the propos ed CPP.

Response 47 : EPA disagrees. EPA has consider the transmission network in the development of the rule and in the modeling and analysis. The rule is designed to be implemented within the existing framework of economic dispatch, and the modeling inc orporates interregional limits in assessing the impacts of the rule. See the RIA and Section V of the Preamble for further description.

Comment 48 : Commenters stated that reliably implementing state compliance plans cannot be accomplished by 2020.

Comm enters stated that EPA assumes that the proposed guidelines provide sufficient time and flexibility for states to manage the accelerated transition of the existing generating fleet that the rules envision. Commenters stated that this assumption is predica ted on the idea that implementing the proposed Building Blocks will not require changes to the existing interconnected power system. Commenters stated that a change to any part of the interconnected power system "even one that appears relatively minor, suc h as increasing the generation produced by an existing unit" requires an analysis of the potential impacts on the rest of the system.88 Commenters stated that NERC notes that the proposed guidelines do not recognize the need to expand and enhance the transmi ssion grid and that the guidelines do not address grid reliability issues associated with increased variable resources and retirement of fossil

- based generation:

Commenters concluded that as a practical matter, this schedule does not allow adequate time fo r the needed reliability assessments and system changes to be accomplished before 2020. Commenters stated that the studies themselves can take several years to complete. Commenters stated that building new generation, new natural gas delivery infrastructur e and new transmission lines can also take years to complete.

Response 48 : In the final rule, the start of the interim period is now 2022 rather than 2020. See preamble for further discussion.

Comment 49 : Commenters stated that Increased Reliance on Gas

- Fired Combined Cycle Generation Will Increase the Cost of Natural Gas and Could Potentially Create Reliability Issues

Commenters stated that natural gas is one of the most price volatile commodities in existence. Commenters stated that greater use of nat ural gas for many applications will place upward pressure on the price of natural gas as the recently discovered new domestic gas supply reserves mature and decline. Commenters stated that the EPA's reliance on natural gas

- fired combined cycle (NGCC) gener ation in its Clean Power Plan will increase the use of natural gas as states build additional NGCC plants. Commenters stated that this issue will be compounded by the fact that the Clean Power Plan includes the non

- dispatchable resources of renewable energ y and DSM energy efficiency, which will force states to build and utilize NGCC units as a replacement for base

- load coal

- fired units in order to ensure grid reliability.

Commenters also stated that that reliance on a single source of fuel is, in and of it self, a reliability concern. Commenters stated that a basic tenet of electric system reliability is to use a diversified fuel mix in order to mitigate volatility in supply and pricing. Forcing the entire country to rely on gas

- fired generation as a base lo ad fuel is an exceptionally bad energy policy.

Commenters stated that prior to the approval of any state compliance plans, a study should be undertaken that evaluates the impact on: (1) the supply and demand of natural gas; (2) natural gas prices; (3) cur rent gas transmission pipelines; and (4) the need and timeline for constructing new gas transmission pipelines. Commenters stated that this study should be conducted by the Federal Energy Regulatory Commission with input solicited from states.

Commenters stated that renewable energy is not a dispatchable resource. Commenters stated that renewable generation cannot be substituted for traditional dispatchable resources on a MW for MW basis. Commenters stated that the EPA's BSER effectively substitutes non

- di spatchable renewable resources for base load coal units. Commenters stated that while some level of renewable resources is appropriate, renewable resources cannot provide base load generation or reliability to the grid and cannot be the sole substitute for coal

- fired units.

Commenters stated that additional variable resources, such as wind generation, will lead to increased cycling of fossil units, which will decrease their efficiency, which will lead to an89 increase in CO2 emissions. Commenters stated that there are also technical challenges to integrating and managing large quantities of renewable generation into the transmission and distribution system, which will be compounded as the level of renewable energy grows. Commenters stated that the EPA's Clean Power Plan relies too heavily on renewable generation resources and DSM energy efficiency programs. Commenters stated that neither renewable generation resources nor DSM energy efficiency programs are dispatchable. Commenters stated that the EPA's relianc e on renewables and DSM energy efficiency is another example of the EPA's lack of knowledge and experience in matters related to generation dispatch. Commenters stated that they will not recommend approval of any state compliance plan that may result in an unreliable electrical system.

Response 49 : Regarding projected impacts of the final rule on natural gas demand and price, see Chapter 3 of the RIA.

The final rule does not require reliance on any single fuel source.

Regarding the technical feasibility of the renewable generation potential quantified in building block 3, see final rule preamble section V.E. and the GHG Mitigation Measures TSD.

Regarding reliability and state plans, see section VIII.G.2 of the final rul e preamble.

Regarding state compliance plans, we have already considered natural gas infrastructure and believe that it can readily accommodate the expanded NGCC utilization contemplated under BB2, and any potential expansion would not exceed the degree or rate of expansion demonstrated by the industry historically. See final rule preamble section V.D.

Comment 50 : Commenters stated that rule will potentially, adversely impact Kentucky industry

Commenters stated that the manufacturing sector in Kentucky and across the nation is a major energy consumer. Commenters stated that Kentucky is home to particularly energy

- intensive manufacturing processes including aluminum smelting, automobile production, appliance manufacturing, iron and steel mills, paper mill s, chemical production, and glass manufacturing. Commenters stated that according to the latest statistics published by the Kentucky Department of Energy Development and Independence, almost 96% of the Commonwealth's electricity is generated by fossil fuel

- fired sources; 92.7% was generated through coal combustion alone. Commenters stated that the abundance, low cost (second lowest average electricity cost in the nation), and reliability of these energy sources has allowed Kentucky manufacturers to remain

c ompetitive in the global economy. Commenters stated that they are concerned that the proposed CPP could undermine the reliability of the U.S. electric grid and increase energy costs and deal a lethal blow to the competitiveness of Kentucky's energy

- intensi ve manufacturing sector.

Commenters stated that the proposed CPP contains CO2 emission "goals" for each state plan to meet. Commenters stated that in reality, these "goals" are state

- by

- state emission caps. Commenters stated that under the proposal, Kentuc ky will be required to reduce CO2 emission rates from EGUs by 17

- 18%. In analyzing the mandated reduction in light of the amount of fossil fuel generation, Kentucky will be forced to fundamentally alter the way energy is produced,90 priced, and consumed in t he Commonwealth. Commenters stated that conservative estimates are that the CPP would result in 14% to 17% increases in retail electricity prices for Kentuckians.

Response 50 : The EPA projects that this final rule will have minor impacts on electricity pr ices. See Chapter 3 of the RIA. Regarding reliability, see section 8.9 of this document.

Comment 51 : Commenters stated that industry cannot transition from coal in such a short timeframe

Commenters stated that EPA projects an additional 49 GW of coal p lants will retire under the proposed emission guidelines on top of the retirements already announced from previous EPA regulations. Commenters stated that this transition to a different energy supply portfolio in such a short period of time is very concern ing. Commenters stated that the regional approaches proposed with the NODA will create an even greater energy transition raising the specter of significant costs arising from recent installation of environmental controls on coal

- fired plants forced to reti re under the emission guidelines.

Response 51 : The start date of the interim compliance period is extended to 2022 in the final rule, and building block 2 is phased in over the interim period. Additionally, the final rule continues to give states signifi cant flexibility in how they comply with requirements, including both BSER and non

- BSER measures as a means to comply, and there are many ways in which states can develop plans that account for their potential reliability concerns. See final rule preamble section VIII.

Comment 52 : Commenters stated that cost and availability of electricity will be impacted.

Commenters stated that all of their electric utilities will be affected by the Proposal, since it would impact the cost and availability of base load generation and alter the dispatch of generation. The Building Blocks for renewable energy and energy efficiency could have a direct impact on each provider, depending on the state implementation plan.

Response 52 : For an analysis of the projected impacts of the final rule, see the RIA.

Comment 53 : Rapid change to NGCC will result in reliability problems

Commenters stated that shutting down coal

- fired plants, particularly in the short period of time allowed by the glide path and the interim goals, means that there is less base load on the grid to provide vital ancillary services. Commenters stated that it will force more reliance on and build

out of NGCC. Commenters stated that the decrease in diversity is also a decrease in reliability, as well as a p ossible national security issue.91 Response 53 : See preamble for a discussion of changes in timing to the final rule, including a 2022 start date for the interim period as well as an emission reduction glide path.

Comment 54 : Multiple commenters stated th at schedule and demands of the rule would cause unacceptable risk and that states' authority is being intruded upon.

Commenters stated that EPA's proposal, would cause unacceptable risk to the state's electricity system and the benefits it provides. The commenters stated that EPA should withdraw its proposal and redo it, within the limited legal authority that the Clean Air Act allows and without intruding on the sovereign authority of the state to determine how electricity is generated and distributed to its citizens, businesses, and farmers.

Response 54 : The EPA disagrees with this comment. The final rule continues to give states significant flexibility in how they comply with requirements, including both BSER and non

BSER measures as a means to comply. See section VIII of the final rule preamble.

Comment 55 : Commenters stated that prices will increase.

Commenters stated that EPA's own estimates project that the Proposed Rule will cause nationwide electricity increases averaging between 6 and 7 percent in 2020, and up to 12 percent in some locations. Commenters stated that EPA estimates annual compliance costs between $5.4 and $7.4 Billion in 2020, rising up to $8.8 Billion in 2030.

Commenters stated that an analysis by NERA Economic Consulting indicated that average U.S. electricity prices would increase by 12% per year, and the total costs of the rule c ould be between $366 Billion and $479 Billion over a 15 year timeframe. Commenters stated that conservative estimates by Arkansas Electric Cooperative Corporation ("AECC"), indicate that the Proposed Rule will cause a 22 to 34% increase in electricity pri ces by 2025, and a further price increase between 17% and 32% by 2030. Commenters stated that coupled with other increases in costs projected by AECC, electricity prices will increase between 79% and 98% by 2025, and between 105% and 132% by 2030. Commente rs stated that he increased costs from the Proposed Rule and other EPA regulations affecting AECC's system will be extremely detrimental to NSA and NYS and their customers and suppliers, and could result in their steel not being as competitively priced as other sources or options available to their customers, including foreign sources not subject to the EPA Proposed Rule. Commenters stated that these costs will have to borne not only by NSA and NYS but also by all other residential, commercial and industria l energy consumers who will not only pay more for energy, but also could be forced to purchase new equipment under energy efficiency programs mandated by the Proposed Rule. Commenters stated that since 2001, energy costs for middle

- income and lower

- income families have increased by 27 percent nationally while their incomes have declined by 22 percent. Commenters stated that the Proposed Rule and EPA's Environmental Justice analysis fails to evaluate the economic impact of the Proposed Rule on low

- income and minority communities, including for example, increased mortality among lower income and disadvantaged demographic groups associated with increases in electric rates.92 Response 55 : See discussion of projected impacts on retail price and electricity bills in Chapter 3 of the RIA.

Comment 56 : Commenters stated that rule will adversely impact Wyoming economy.

Commenters stated that Wyoming supplies 40% of the coal used in the United States

- distributed to 30 some states annually. The mining industry employ s

- directly and indirectly

- thousands of people in Wyoming. Coal production funds school construction, infrastructure projects and federal, state and local government functions. In addition to mining, Wyoming coal fired power plants produce affordable po wer for residents and businesses both in Wyoming and in other states. Commenters stated that the EPA's Proposal will create an unnecessary burden for Wyoming residents and businesses who receive 89% of their electricity from coal generation.

Commenters sta ted that this Proposal decreases fuel diversity. Commenters stated that utilities will be over

- reliant on natural gas generation as coal is phased out. Commenters stated that power generation and home heating will compete for the resource. Commenters state d that individuals will pay both higher electricity bills and higher heating bills. Commenters stated that there is a real risk of insufficient supply of natural gas.

Response 56 : EPA disagrees with this comment. For projected impacts on electricity pric es, gas prices, and electricity bills, see RIA Chapter 3.

Comment 57 : Commenters stated that as the proposed rule introduces unworkable barriers to implementation on the state level and has raised significant concerns regarding system reliability. Comment ers stated that these factors must be taken into account in the promulgation of a final rule. Commenters stated that otherwise the proposed rule should be withdrawn and re

- proposed in a manner that adequately addresses these and other implementation and re liability concerns.

Response 57 : EPA has addressed system reliability in the Resource Adequacy and Reliability TSD and in section 8.9 of this response to comment document.

Comment 58 : Commenters stated that there will be insufficient time to meet goals.

C ommenters stated that to determine the interim standard for each state, EPA assumed that all emission rate reductions from Building Blocks 1 and 2 could be achieved at the start of the ten

year interim compliance period. Commenters stated that as a consequ ence of this flawed assumption, for many states, almost all of the emission rate reductions that the Proposed Rule ultimately requires, must be achieved in the first year of the ten

- year interim compliance period...

Commenters stated that they are left wit h little or no flexibility to determine a different compliance path to avoid the 2020 compliance cliff under EPA's proposed schedule for implementation. Commenters stated that EPA intends to finalize the Proposed Rule in mid

- 2015,93 which means that the earl iest state implementation plans would be approved by EPA is mid

2017. Commenters stated that, at most, this schedule leaves 2

- and

- a

- half years for electric generating companies to achieve aggressive emission reductions and states to make sweeping changes to their existing regulations and electric generation, transmission, and distribution systems. Commenters stated that given the stringency of the interim standards, the proposed implementation schedule will force states to rely on coal unit closures to ach ieve compliance. Commenters stated that eliminating state's compliance flexibility runs afoul of Section 111(d)'s requirement that states be able to consider units' remaining useful life in complying with 111(d). Commenters stated that the constricted time line will prevent states from cushioning economic impacts from retirements.

Response 5 8: In the final rule, the start of the interim period is now 2022 rather than 2020. See preamble for additional discussion of this change, which provides additional tim e.

Comment 59 : Commenters stated that if Building Block 2 is implemented the CPP would unequivocally impact wholesale power markets by placing NGCC units at the front of the dispatch line, and coal

- fired units at the back, distorting a marketplace that is based upon economic bidding and pricing.

Response 59 : The final rule does not require any particular NGCC unit or group of NGCC units to achieve any particular utilization rate. See Section V of the preamble.

Comment 60 : commenters discuss the future of coal mining in the United States.

Commenters provided discussion about the future of the U.S. coal supply. Commenters asserted that the coal reserves are considerably smaller than what is ordinarily understood.

Commenters stated that in order to be accur ately classified as "reserves," coal resources should be able to be mined at a profit, but EIA has never analyzed what it terms "Estimated Recoverable Reserves" of US coal for economic profitability. Commenters stated that in 1997, the EIA acknowledged tha t what it terms coal "reserves" are not actually reserves, and that the widespread belief that the US has a "200 year supply" of easily mined coal is not true. Commenters stated that the likely truth is that the US is rapidly approaching the end of coal th at can be mined at a profit with extremely serious implications for the US economy. Commenters provided several reports prepared by the commenters documenting these assertions and EIS and USGS publications discussing coal resource availability.

Commenters stated that as the U.S. approaches the end of economically recoverable coal, the cost of the EPA's Clean Power Plan is likely to be less than estimated because continuing the status quo of heavy reliance on coal to generate electricity will become increasi ngly costly as the remaining coal becomes more expensive to mine and the U.S. electric utility industry could begin to experience increasing constraints on coal supplies for the coal

- fired power plants that currently produce large amounts of electricity fo r the U.S. economy. Commenters noted that coal94 supply constraints could have extremely serious consequences for the U.S. economy if adequate steps have not been taken to get the U.S. repowered for the 21st century.

Commenters discussed how the economic feasibility of extracting coal affects the ability of coal companies to profitably mine coal. Commenters noted that the top three U.S. coal companies have reported large negative net incomes in the years 2011 through 2013, which the commenters linked to th e higher cost of recovering remaining coal. Commenters stated that as the financial strength of the top 3 U.S. coal companies continues to weaken, the assumptions underlying the Wood Mackenzie (used in the EPA IPM) future coal supply analysis (used in the EPA IPM) seem highly unlikely to be valid. Commenters provided discussion with supporting documentation regarding the commenter's assertion that coal production will not increase, and thus, the Wood Mackenzie coal supply model used in the EPA IPM model ver sion 5.13 overestimates future coal production.

Response 60 : The EPA believes the coal supply assumptions utilized in IPM v.5.15 are reasonable. See Chapter 9 of the IPM Documentation.

8.5 COMPLIANCE COSTS

Com ment 1: Commenters suggested that EPA should provide a clear er and more consistent economic analysis of its rules. The commenters stated that the preamble of the proposed rule presents cost information as total costs while the RIA presents the same costs as annualized costs and as annual incremental compliance costs, and that it is misrepresentative to present annualized costs as total costs. The commenters requested that EPA provide total costs over a defined period in addition to annualized costs so the public and other interested parties can proper ly consider the economic impacts of the EPA's proposed rule and make valid comparisons with their own cost estimates. The commenters also requested that EPA provide a clear explanation of exactly how cost estimates have been annualized.

Commenters stated t hat the analysis does not recognize investments that have already been made in Kansas.

Respo nse 1: The RIA appropriately and transparently presents the annual cost and benefits of the two illustrative compliance scenarios. To estimate these annualized cost s, EPA uses a conventional and widely

- accepted approach that applies a capital recovery factor (CRF). For more detail, see Chapter 3 of the RIA.

EPA’s modeling of the final rule incorporates updates which include unit

- level specifications (e.g., control i nvestments). See Chapter 3 of the RIA.

Comment 2: Commenters recommended that a simple, uniform framework that would allow for least

- cost compliance be developed to ease the compliance burden and increase certainty for all parties subject to the regulati ons, as provided by EPA for previous regulations. The commenters95 stated that utilities and power systems are already struggling with the complexities and that a holistic design approach should be used to ensure that the full merits of RE, EE, and CO2 actio ns work synergistically in a mutually beneficial manner to minimize compliance costs.

Re sponse 2: See preamble to final rule which discusses the uniform framework incorporated into the final rule.

Com ment 3: Commenters stated that EPA has underestimated compliance costs.
Commenters stated that the NERA study's estimated compliance costs, totaling $366 billion to $479 billion over the 2017 to 2031 period, are nearly ten times EPA's estimate. Commenters discussed the two main scenarios used by NERA to analy ze the energy market impacts of the proposal which assumed each state would use the least expensive combination of the four Building Blocks; and that real world constraints would limit compliance options to just Building Blocks 1 and 2 due to the need for state legislation to increase renewables and demand

- side energy efficiency. The commenters further cited the study's estimates that compliance costs would equate to double digit electricity rate increases in 43 states, with 14 of those states potentially e xperiencing peak

- year electricity rate increases in excess of 20 percent. The commenters stated that the analysis predicts that annual average electricity prices in the four states encompassing their [the commenters] traditional operating company service t erritory will increase between 11 and 17 percent between 2017 and 2031. The commenters also discussed NERA's predictions that coal retirements will increase by at least 45,000 MW resulting in more than one

- third of the U.S. coal

- fired generating fleet reti red by 2020 due to cumulative impacts of EPA's policies and that natural gas prices could increase by as much as 29 percent.

Commenters further cited the NERA study which concluded that even optimizing among the four Blocks would make the proposal the most costly rule ever created and that annual costs of compliance could be $41 billion or more per year nationally. Commenters stated that even with state flexibility, the absolute cost of implementing the EPA's BSER and an optimized economic compliance soluti on yields intolerably high compliance costs and customer rate increases. The commenters further stated that such a proposal cannot possibly reflect the "best" system of emission reduction and is at odds with the Administrator's obligation to regulate only as necessary to carry out her functions under the Act.

Commenters also cited a study by Florida Electric Power Coordinating Group concluding that 1) the overall Florida utility costs impacts would likely total in the billions of dollars due to the need for fuel switching and construction of significant, additional zero

- emitting sources of energy (the equivalent of 5 to 20 GW) to meet compliance needs, 2) the proposed rule could potentially result in rate impacts approaching 25 to 50 percent, and 3) the impa ct and possible additional cost to expand Florida's transmission grid and limited natural gas pipeline infrastructure is unknown at this time. The commenters stated that the costs in the study far exceed EPA's estimates.

Commenters stated that the EPA's m odel assumes that renewable generation can be constructed, and placed into the electric grid, with little perceived complications or impediments; there is also96 little consideration of the transmission constraints entailed in expanding renewable generation. Commenters stated that besides increasing compliance costs, constructing new transmission capacity will increase the time to comply with the Rule Proposal's renewable requirements. Commenters added the transmission line construction process takes years.

Commenters also cited preliminary estimates from the Florida Electric Power Coordinating Group, and stated that EPA may have grossly underestimated the potential range in its estimated direct and indirect costs. The commenters also stated that preliminary estimates show that average statewide retail rates could increase 25 to 50 percent by 2030 as a result of the Proposed Rule, however states and individual utilities cannot even begin to develop reliable estimates of compliance costs with the Proposed Rule without knowing the final requirements of an EPA approved State Implementation Plan. The commenters concluded that if EPA's proposed BSER is not revised, the stringent emission performance requirements will require substantial compliance costs for Florida, including compliance costs assumed in the Building Blocks and additional costs such as the building of new natural gas pipelines, the building of new generation, the possible improvements and/or building of new transmission lines, and the cost of stranded assets resulting from the premature retirement of existing baseload generation. The commenters also stated that it is important to emphasize that pursuant to Florida Statutes, investor

- owned electric utilities are entitled to recover prudently incurred co sts in complying with environmental laws or regulations, including the Clean Air Act.

Commenters stated that EPA's Building Block assumptions are in most cases unrealistic and unachievable and that implementing the Building Blocks as designed will almost c ertainly cost more than EPA has estimated because of the Agency's unrealistic assumptions about achievability.

Commenters stated that EPA had underestimated compliance costs in Wisconsin, including underestimation of the cost of new transmission lines. Th e commenters also cited public opposition to transmission improvement projects, and the time necessary for construction of transmission lines (up to 8.5 years in Missouri, and up to 5 years in the ERCOT region).

Commenters stated that the global SCC value utilized is faulty, that EPA does not evaluate potential transmission reliability impacts as requested by NERC, and that EPA grossly underestimates the potential costs of the proposal while demonstrating no valid benefits.

Commenters stated "Our prelimina ry analysis indicates EPA has overestimated greatly the monetized benefits for this rule and also underestimated the cost to the public."

Commenters stated that the EPA's annual cost estimates are based only on 'the change in electric power generation cost s between the base case and the proposed rule . . . includ[ing] cost estimates for demand

- side energy efficiency' and 'the amortized cost of capital investment, needed new capacity, shifts between or amongst various fuels, deployment of energy efficiency
p rograms, and other actions associated with compliance.' Commenters stated that the EPA's estimate therefore does not appear to include the significant additional costs that will be incurred by the asset owners, the states and their ratepayers who will need to absorb the costs of stranded capital investments associated with the retirements and abandonments resulting from the proposed rule, nor does it include the costs of reliability improvements or infrastructure97 investments needed to ensure a stable electr ic grid that will be required as a result of the proposed rule. Commenters stated that the EPA's analysis overestimated the cost of improving energy efficiency by using cost assumptions more than sixty percent above the costs observed in practice including costs observed in the assessments cited by EPA.

Commenters stated that the EPA must recognize the practical constraints that existing EGUs face. Commenters stated that capital improvements to EGUs take years for the planning, design, engineering, acquisit ion and installation of equipment. Commenters stated that as a result, electric utilities need reasonable time and, just as importantly, adequate certainty to make the type of costly investments necessary for compliance.

Commenters stated that the MISO est imates that in the state of Indiana transmission infrastructure ranges from $3.2 million/mile of line for 765 kV construction, to $560,000 per mile of line for 138 kV. Commenters stated that while the large capital cost of providing new electrical infrastr ucture to remote renewable facilities is certainly a substantial cost, what is not represented by the MISO study is the significant time required to procure right of ways and other time

- consuming, costly permitting and siting requirements.

Commenters state d that the EPA's proposal simply does not address whether or how much transmission build

- out will be needed to support the additional wind and renewable generation needed to meet its Building Block 3 target for Texas, and therefore assumes no incremental c osts associated with transmission.

Commenters stated that the EPA simply cannot justify unilaterally implementing a rule with such dire financial consequences given the Agency's role in Section 111(d). Commenters stated that this rulemaking should be aband oned in favor of debate in and approval by Congress of any federal action in response to global climate change.

Commenters stated that the EPA may consider the costs of BSER at the source level, the industry level, and, in the case of the power sector, the national level in terms of the overall cost of electricity and the impact on the national economy over time. Commenters stated that costs must not be exorbitant and must not be 'greater than the industry could bear and survive.' Commenters stated that the proposed BSER envisions significant investments being made at coal

- fired EGUs through emissions reductions required in building block 1 while, at the same time, projecting that the BSER across states and/or nationally would result in the elimination of a significant amount of base load power. Commenters stated that while EPA indicates there will still be coal affected EGUs in operation as of 2030, EPA's own modeling suggests that there will be significant retirements of affected coal EGUs. Commenters state d that this makes sense as the vast majority of the proposed BSER is directed at a dramatic reduction in power generation at coal affected EGUs. Commenters stated that it appears this presents the opportunity for stranded investments at coal affected EGUs and EPA has not indicated how the proposed BSER avoids this. Commenters stated that the EPA, as in many circumstances throughout the proposed guidelines, simply relies on the fact that states are not required to implement all measures included within BSER

- they are just required to ensure the emissions reductions associated with application of all the measures are achieved. Commenters stated that the proposed guidelines also do not address costs and other constraints related to infrastructure needs and trans mission construction and upgrades that would be necessary under the application of proposed BSER.98 Commenters stated that State implementation plans that lack coordination have the potential to increase costs relative to coordinated state plans in several ways. Commenters stated that many entities in the electricity sector, including generation asset owners, utilities, competitive retail providers, and power marketers operate in multiple states. Commenters stated that patchwork of individual state implement ation plans means that these entities would have higher administrative costs due to the need to track and comply with different rules in different states. Commenters stated that entities that own generation or serve load in two or more states could face hi gher compliance costs when the states in which it operates do not develop coordinated plans. Commenters stated that these entities would not be able to take advantage of least cost emission reduction opportunities in different states, or average emissions across assets in different states.

Response 3: EPA’s analysis of two illustrative compliance approaches is a reasonable estimate of the costs and benefits of the final rule. See RIA Chapter 3.

Co mment 4: Commenters stated that there will be significant e lectric transmission and gas infrastructure build

- out required over a short amount of time to meet the 2020 interim goal of the CPP and that EPA should have considered the impact this build

- out will have on the availability of the necessary materials and l abor force in the development of the draft CCP. The commenters cited concerns surrounding whether there are sufficient materials and labor available to meet these standards and about the impacts this demand will create on the cost of labor and materials

- costs that will ultimately be borne by ratepayers.

Commenters stated that the necessary new NGGC that will be necessary to comply with the proposed rule increases the cost of compliance by $1.9 billion. Commenters further stated that the cost of new gener ation capacity, significant transmission investment could also be required depending on the location of the new capacity versus the load centers in the state.

Commenters stated that substantial transmission upgrades may be needed and transmission infrastru cture studies will be needed to assess the impact. Commenters further stated that the significant cost impact of transmission grid improvements and the reliability issues posed if they are not implemented are not sufficiently addressed or considered by the proposed rule.

Commenters stated that depending upon the startup/shutdown cycles and load cycling type, from 49 to 62 percent of the cycling cost results from increased capital and maintenance costs associated with increased maintenance frequency, inspect ions, and repairs. Commenters further stated that 23 to 29 percent of the cost increase results from forced outages requiring not only repairs (parts and labor), but also purchase of replacement power.

Commenters stated that the Mississippi Energy Institut e estimates it would cost Mississippi utilities $14 billion to comply with these regulations. Commenters further stated that this $14 billion will be diverted from growing our economy, creating jobs, improving our schools, infrastructure and more.

Comment ers stated that a study prepared by the Midwest Independent System Operator (MISO) indicates that the total cost of the rule could be as high as $83 billion in 20

- year net present value
costs.99 Response 4: The final rule eases the timeline and permits both more time and a revised compliance path to 2030 goals that will address major concerns over infrastructure development. Also see RIA for impacts on natural gas and Resource Adequacy and Reliability Analysis TSD for impacts on interregional transmission fl ows.

Co mment 5: Multiple commenters stated that the compliance costs of the proposed rule are underestimated.

Commenters stated that EPA grossly underestimates the potential costs of compliance, based on independent studies and a preliminary estimate of the cost of one of EPA's compliance scenarios. The commenters further stated that EPA's modeling is inadequate due to significant unit

- level errors and inaccurate assumptions regarding fossil fuel

- fired unit retirements and new generation.

Commenters also provided a preliminary estimate of the cost of compliance based on the IPM predicted "Option 1 State Scenario", however the commenters noted that the ultimate impacts cannot be determined without the: structure, timing, and content of EPA's final guidelin es; individual state implementation of these guidelines, including the potential that state implementation plans impose different standards; additional rulemaking activities in response to legal challenges and court decisions; the impact of future changes in generation and emissions

related technology and costs; the impact of future decisions regarding unit retirement and replacement, including the type and amount of any such replacement capacity; and the time periods over which compliance will be required. The commenters stated that the impacts would place more than $35 billion in upward pressure on company customer rates between 2016 and 2030, only to achieve initial compliance. Additional significant costs would be expected every year beyond 2030 to maint ain compliance. The commenters listed the following additional impacts:

• Retirement of 9,400 MW of coal

- based generation by 2018 (beyond the 3,000 MW of MATS retirements) resulting in significant local economic impacts and major disruption to system operati ons and reliability;

• Six percent reduced heat rate of the remaining 8,400 MW of coal capacity level of reduction which is impossible to achieve, unsustainable at any cost, and not Adequately Demonstrated;

• Replacement of over 5,400 MW of coal capacity wit h of new NGCC capacity and increased utilization of existing NGCC by 2020, significantly increasing the company's dependency on natural gas and stressing an already fully subscribed Southeastern pipeline system; and

• Implementation and maintenance of DSEE at levels that grow to 11 percent of total MWh sales by 2030, ten times the level achieved by the Company system to date, the pursuit of which would require significant rebates, incentives, and cross subsidies between participating and non

- participating cu stomers.100 Commenters stated that while already significant, this analysis does not reflect the second order rate impacts associated with the higher gas prices that would inevitably result from the significant shift in generation from coal to gas or other u npredictable factors such as capital costs, the costs of implementing specific actions of compliance scenarios, and shifts in the economy. The commenters added that this analysis does not factor in the costs of proactive steps taken by the Company subsidia ries to diversify their fleet or include the negative impacts that these higher electricity prices would have on the health of the state and national economy. Lastly, the commenters remarked that EPA improperly claims public health benefits and inappropria tely relies on unsupported global benefits that should not be used in a national regulatory context. The commenters concluded that because the proposed rule provides no benefits to weigh against the exorbitant costs, it is therefore unjustified and unlawfu l.

Commenters also stated that EPA has significantly underestimated the costs of the Proposed Guidelines because the Building Blocks are based on unreasonable assumptions and will be much more costly to implement than EPA assumes. The commenters added tha t the proposed rule is not justified by the purported benefits when those benefits are characterized properly, and that EPA has failed to accurately estimate the impacts of broad disruptions to the economy, energy security, and the reliability of the U.S. power system.

Commenters stated that the total demand for coal (and the price) will not drop because of export demand so electricity prices will not fall as the EPA predicts. The commenters estimated that this will add $1.6 billion per year to the complia nce cost.
Commenters stated that the IPM says that compliance will cost between $7.3 and $8.8 billion which may be too low as ERCOT just completed a $6 billion upgrade of their electric grid infrastructure to support 12 to 18 gigawatt hours of transmission from West Texas to East Texas. The commenters stated that based on his calculations the IPM estimate is about an order of magnitude low and needs to be revisited and recalculated.

Commenters estimated that the CPP as proposed would cost the state of Kans as $8.75 billion with a possible range of costs between $5 billion and $15 billion. The commenters estimated that the cost to Kansas associated with the additional generation resources will be $3.25 billion. The commenters also estimated an additional $1 billion cost for new infrastructure to support water and/or natural gas pipeline capacity. The commenters estimated costs of $2 billion for additional transmission allocated to Kansas ratepayers as a result of the CPP.

Commenters stated that EPA's Regula tory Impact Analysis used annualized energy efficiency costs as part of their summary of compliance costs, which has the impact of pushing costs out into the future and making the compliance spending in 2020, 2025, and 2030 appear lower than it would actua lly be.

Commenters stated that the NODA proposes substantial modifications to the CPP which, if implemented, will have a crippling impact on EGUs within North Dakota and other states and that EPA has not met its obligation to account for these impacts (rel iability of electricity production, economic volatility, loss of jobs). The commenters stated that the NODA risks destabilizing electricity production in North Dakota, which is particularly important during North Dakota's long winters due to fuel availabi lity. The commenters cited a NERA study which101 concluded that implementation of the CPP as written will cause a 12

- 17% increase nationwide (11

- 22% in North Dakota) in electricity prices for consumers. The commenters stated that EPA did not consider the add itional costs created by ramping up its regulations with the modifications announced in the NODA.

Commenters stated that the data upon which EPA based its IPM modeling contained errors and false assumptions, resulting in inaccurate projections that do not reflect Florida's actual compliance costs. The commenters stated that EPA's IPM projections also do not consider the substantial stranded assets that would result from forcing units to retire prior to the end of their useful life, as well as the additiona l cost of developing the infrastructure and new generation to replace those units. The commenters stated that EPA should correct all errors and inaccurate assumptions in its data, take into account the costs associated with stranded assets and replacing

re tired units, re

- model the Base Case and Policy Case scenarios to more accurately assess the proposal's impacts, and then give stakeholders an opportunity to comment on EPA's revised projections.

Commenters cited a NERA study estimating the costs of the pro posed rule at $41 to $73 billion per year, and an increase in residential electricity rates in Ohio of 12 percent. The commenters cited a study by Energy Ventures that estimates that energy regulations, including the Clean Power Plan, cumulatively would in crease the cost of electricity and natural gas by nearly $300 billion nationally in 2020 compared with 2012, and that gas bills would increase in Ohio by 51 percent and industrial electricity rates would increase 74 percent in nominal terms.

Commenters sta ted that EPA underestimated the costs of the proposed rule. The commenters stated that MISO, estimated that, just in the MISO region, the 20

- year discounted compliance cost would be $55

- $83 billion, even without considering the significant amount of trans mission and natural gas pipeline development that the rule will make necessary and the billions of dollars in stranded pollution

- control investments that the rule will create. The commenters stated that ERCOT forecasts 20% retail rate increases by 2020, " without accounting for the costs of transmission upgrades, procurement of additional ancillary services, energy efficiency investments, capital costs of new capacity, and other costs associated with the retirement or decreased operation of coal

- fired capac ity in ERCOT. The commenters stated that the Kansas Corporation Commission estimated $5

- $15 billion in compliance costs, with a corresponding electric rate increase of between 10% and 30% over 13 years. The commenters cited an analysis by Energy Ventures Analysis (EVA), that estimated for the ten

- year period of 2020

- 2030 wholesale electricity costs will increase by $274 billion, non

- power natural gas costs will increase by $ 80 billion and additional capital costs for replacement power will be $53 billion. The commenters cited a NERA study which projected annual costs of $73 billion under a scenario that assumes that states do not have authority to undertake all four building blocks but would have to obtain their emission reductions through building blocks one and two and estimated that the proposed rule will cause double

- digit electricity rate increases in 43 states.

Commenters stated that independent economic studies indicate that the actual cost of the Proposed Rule will be exponentially higher than EPA's estimates. The commenters cited a study by the U.S. Chamber of Commerce's Institute for 21st Century Energy that estimated that the Proposed Rule would reduce the nation's GDP by an average of $50 billion annually over the next seventeen years and cause an average annual decrease of over 200,000 jobs, driven by direct102 compliance costs of $480 billion over fifteen yea rs, as well as increases in electricity costs for ratepayers. The commenters stated that electricity prices would increase 11%

- 17% annually and total energy costs would increase by an average of 8%

- 11% each year for fifteen years.

Commenters stated that E PA's estimate of annual incremental cost ($4.3 billion to $8.8 billion depending on the year and compliance option selected) is understated, and cites estimates that compliance will cost $400 billion over ten years and $480 billion by 2030, driven by the l ost return on investment of retiring coal

- based generating capacity before the end of its economically useful life, as well as the costs of new generating capacity (particularly using natural gas) and related infrastructure. The commenters stated that a p ortion of the costs would be from the stranded investment of recent efforts by individual states and their utility companies to make coal

- fired generation cleaner.
Commenters cited compliance cost estimates by Energy Ventures of $407 billion over a ten

- ye ar period for the mass

- based option and NERA of $366 to $479 billion over a 15

- year period for the rate based option. Commenters stated that these estimates do not include (1) new transmission investments to access more remote high wind areas and to react to changes in power flows; (2) additional transmission ancillary services to handle greater amounts of variable wind and solar generation; (3) higher gas rates from increasing costs for pipeline compression; and (4) GDP changes triggered by raising energy prices. Commenters stated that more than 40 states will see double digit increases in electricity prices and 14 or more states will experience increases that exceed 20 percent. Commenters stated that EPA's prediction of the impacts of the UMATS rule was in accurate.
Commenters stated that EPA's proposal does not recognize approximately $10.5 billion in investments in clean renewable energy, and threatens Wisconsin's ability to continue to meet the energy needs of its citizens. The commenters estimated the co st of compliance with this proposal to be $3.3 to $13.4 billion for Wisconsin, not including any costs related to additional infrastructure needs associated with this rule, such as natural gas infrastructure necessitated by increased gas use contemplated u nder this proposal, or the need for new transmission lines. The commenters stated that the EPA's plan does not consider "stranded costs," which are those investments that have been made in coal

- fired power plants that may need to be retired earlier than a nticipated due to the requirements contained in this rule proposal.

Commenters stated that EPA's IPM projections do not consider the substantial Florida state

- wide stranded assets that would result from forcing units to retire prior to the end of their use ful life, as well as the additional cost of developing new generation to replace those units. The commenters stated that these costs will be substantial if, as EPA's IPM projections indicate, over 90% of Florida's coal generation is forced to retire before the end of its useful life. The commenters stated that EPA should correct all errors and inaccurate assumptions in its data, re

run the model and then provide stakeholders an opportunity to comment on EPA's revised projections.

Commenters stated that und er the Clean Power Plan, the generation from Kansas's coal

- fired fleet must be significantly reduced or eliminated results in significant stranded costs to Kanas ratepayers. The commenters stated that Kansas ratepayers must continue to pay for coal

- fired generation resources (including the recent environmental upgrades) that will either be curtailed103 or forced to retire early as pay for the new generation, transmission, and DSM energy efficiency costs required under the Clean Power Plan. The commenters stat ed that because stranded investments are excluded, the EPA's projected compliance costs are significantly understated. The commenters stated that the EPA should grandfather (exclude) all of the Kansas coal

- fired generation resources that have undergone en vironmental retrofits from the Clean Power Plan. The commenters stated that the law is clear that the remaining useful life of EGUs must be taken into account and that EPA cannot and should not ignore this factor.

Commenters stated that utilities have mad e significant investments in EGUs to continue their operation for the foreseeable future, and in response to the CAIR, CSAPR, BART, Visibility and MATS rules, the utilities have recently had considerable expenditures. The commenters stated that EPA must in clude current unpaid costs for individual EGUs in its costing analysis. The commenters stated that these expenditures will impact the way IPM dispatches resources or, at a minimum, affect the total cost of the proposed CO2 rule.

Commenters stated that EPA' s analysis of the cost of its Clean Power Plan is significantly understated. The commenters stated that EPA estimates that the annual incremental cost of its plan could range from approximately $4 billion to almost $9 billion, yet independent analyses esti mate costs as much as $28 billion annually. The commenters stated that EPA estimated nationwide electricity prices would increase between 6 and 7 percent in 2020, but NERA estimated that average U.S. electricity prices actually would increase by 12% per ye ar and the total costs of the rule could be between $366 billion to $479 billion over a 15 year timeframe. The commenters stated that energy cost increases disproportionately burden low and middle

income families, who spend a higher percentage of their inc ome on energy costs and are the least capable of absorbing further increases. The commenters stated that EPA has not considered power plant retirements and fuel switching which would strand energy investments. The commenters stated that higher costs would also result in net job losses for the American economy and reduce the competiveness of American manufacturing. The commenters also cited the U.S. Chamber of Commerce's Institute for 21st Century Energy study.

Commenters the interim goals require duplicati ve/unnecessary capacity additions that are extremely costly to all customers, but are particularly burdensome to fixed and low

- income
customers.

Response 5: EPA’s analysis of two illustrative compliance approaches is a reasonable estimate of the costs and benefits of the final rule. This modeling reflects a number of updates, including revised unit

- level specifications (e.g., control investments) and planned new power plant construction and closures. See Chapter 3 of the RIA.

Comment 6: Commenters stated that EPA's own analysis of the Proposed Rule's impacts, as well as analyses by independent consulting groups, indicates that the costs of the Proposed Rule are both exorbitant and excessive in relation to analogous rules in the power sector. The
commente rs stated that EPA projects that the Proposed Rule could increase retail electricity prices by 10% or more in some areas, eliminate employment opportunities for more than 80,000 workers in the power generation, equipment, and fossil fuel sectors and that a s much as 49 GW104 of existing coal capacity will be retired. The commenters cited a NERA estimate that complying with the Proposed Rule will cost EGU owners and operators $366

- $479 billion over a 15

- year period (or $24

- $32 billion per year), and increase electricity prices by as much as 17%. The commenters stated that EPA projects that average natural gas prices will increase by more than 10% versus the base case which would represent an increase of more than 55% from 2012. The commenters stated that EPA 's determination that the selected beyond

- the

- unit measures constitute BSER is arbitrary and capricious in light of the statutory and regulatory requirements that the BSER must be adequately demonstrated when considering costs.

Response 6: EPA’s analysis o f two illustrative compliance approaches is a reasonable estimate of the costs and benefits of the final rule. The estimated retail price impacts of the two illustrative approaches analyzed in the final RIA are lower than projected for the proposed rule, less than one percent on average in 2030. Additionally, natural gas prices are projected to increase by less than 3 percent. For more detail, see RIA Chapter 3.

EPA’s own estimate of the employment losses are more modest than the commenter suggests. Please see Chapter 6 of the RIA for more information.

See final rule preamble section V for full discussion of BSER.

Com ment 7: Commenters stated that the proposed rule would cause utilities to increase their
costs.

Commenters stated that the benefits of the rule outweigh the costs but there should be a mechanism in place for those who are hit by the costs to be helped.

Commenters stated that the utility customers may face staggering costs as a result of EPA's proposal.

Commenters stated that the Proposed Regulation, if approved, is likely to raise substantially both the electric rates and bills Virginians pay. Commenters stated that, using conservative assumptions, the incremental cost of compliance for one utility alone (Dominion Virginia Power) would li kely be between $5.5 billion and $6.0 billion on a net present value basis and that compliance costs will increase the cost of providing electric service, which must be paid for by residents and businesses in Virginia. Commenters stated that Virginia resi dents and businesses would also be responsible for paying remaining costs for useful existing facilities forced to retire prematurely by the Proposed Regulation. Commenters stated that wholesale power costs would increase and that these costs would be pass ed on to the consumer. Commenters stated that the well

- established state and federal requirements for reliable electric service at a reasonable cost to customers, however, cannot be reconciled with the carbon emission rates that the Proposed Regulation req uires for Virginia.

Commenters stated that it is not evident that costs and cost

- effectiveness were given serious consideration in the development of the proposed rules. Commenters stated that the final rule should require that compliance plans demonstrat e that costs have been seriously considered, and105 that consumer advocates, the state PSC, and utilities have participated in determining that the chosen strategies represent the lowest cost alternatives.

Commenters stated that the EPA cost effectiveness ana lysis shortfalls are further emphasized through recent Midcontinent Independent System Operator (MISO) interim analysis of the Clean Power Plan that models CPP compliance while providing for sustaining of MISO system reliability requirements for minimum ca pacity reserves and spinning reserves (EGEAS modeling September 17, 2014). Commenters further stated that the MISO study found that deployment of new generation resources was needed to support system reliability as environmental regulations compel addition al existing coal and natural gas unit retirements. Commenters stated that the MISO has noted in its comments to the CPP Docket that deployment of these new generation resources or infrastructure provisions is not realistically delivered by 2020 and that ti mely deployment can still be a challenge for 2030 CPP compliance. Commenters stated that the MISO also found that additional coal generation would be idled (prospectively retired) to support CPP compliance, amounting to as much as 25% (14,000 MW) of remain ing MISO coal generation capacity in addition to MISO's estimated 12,000 MW of coal unit retirements driven by compliance with other EPA regulations (e.g. the recently reinstated Cross

- State Air Pollution Rule (CSAPR) and Mercury and Air Toxics Standard (M ATS)). Commenters stated that the MISO interim analysis indicates that the cost per ton of CO2 reduction assigned to achieve CPP compliance at the state level across the MISO region is about 50% higher than EPA's $40 per metric tonne CO2 cost effectiveness criterion EPA used to set the state BSER targets (refer to EPA's Technical Support Documentation). Commenters concluded that the MISO found that EPA's CPP is not practical to implement and is unnecessary. Commenters stated that the CPP costs outweigh its benefits by a wide margin for the MISO states.

Commenters cited a NERA study estimating that the proposed Clean Power Plan would cost between $41 and $73 billion per year, and that electricity rates would increase between 13 percent and 18 percent in Louis iana, 20 to 36 percent in Utah with industrial rates expected to increase 22 percent, 11 percent in Virginia, and 16 to 19 percent in Montana. Commenters cited an analysis performed by the Industrial Energy Consumers of America estimating that industrial

r ates would increase 29 percent. The commenters cited a projection by MISO that the 20

- year discounted cost of rule within its 15

- State footprint would be $55 and $83 billion. The commenters cited an analysis conducted by London Economics estimating that t he Clean Power Plan would increase wholesale power prices by up to 40 percent in MISO states by the year 2020.

Commenters cited that an analysis by Energy Ventures Analysis, Inc., estimating that EPA's energy regulations, including the Clean Power Plan, cu mulatively would increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012, and that that gas bills would increase in Virginia by 38 percent and industrial electricity rates would increase by 30 percent.

Commenters cited an analysis performed by the Industrial Energy Consumers of America estimating that industrial rates are expected to increase 23 percent. Commenters cited a study by MISO that estimated the 20

- year discounted cost of rule within its 15

- State footpri nt at $55 to $83 billion. Commenters further cited an analysis conducted by London Economics estimating106 that the Clean Power Plan would increase wholesale power prices by up to 40 percent in MISO by the year 2020.

Commenters stated that Florida utility c ost impacts likely will total in the billions

- and perhaps tens of billions

- of dollars, which will be borne by the citizens of Florida. The commenters stated that rate impacts will vary by utility, depending on utility size and current generation mix

an d that average potential rate increases are estimated to be between 25 and 50 percent.

Commenters stated that Florida cannot meet EPA's Proposed Rule with current generation plants, regardless of how they are dispatched. The commenters stated that fuel switching alone is estimated to result in an average cost to Florida electric customers of $3/MWh to $20/MWh, and that this dispatch scenario would increase Florida's dependence on natural gas from 60% to around 80%, which would materially increase reliabi lity risks resulting from over

- reliance on a single fuel. The commenters stated that even with fuel switching, Florida's average emission rate would still be significantly greater than EPA's proposed requirement of 740 lbs/MWh by 2030 (950 lbs/MWh in 2020, 900 lbs/MWh in 2030) and that if EPA's Proposed Rule is implemented according to the proposed schedule, severe fuel cost increases and reliability deterioration would

occur.
Commenters estimated customer impacts of additional zero emission generation at $ 43/MWh

- $61/MWh (39%

- 56% increase) for biomass; $40/MWh

- $59/MWh (37%

- 54% increase) for solar and $33/MWh

- $51/MWh (30%

- 47% increase) for nuclear. The commenters stated that these costs would create a substantial and disproportionate economic burden to its c ustomers and regional economy.

Commenters stated that the Brattle Group's ('Brattle') analysis of the Proposed Rule projects a compliance cost of $32 per ton of CO2 for Minnesota. Commenters stated that in a scenario where states meet their compliance goal s without cooperation, Brattle projected a marginal CO2 cost between $0 and $36 per ton for the MISO region. Commenters stated that Brattle also projected an energy price increase up to $40 per megawatt

- hour ('MWh') if a coal unit is the marginal unit disp atched in MISO and up to $16 per MWh if a combined cycle gas unit is the marginal unit dispatched.

Commenters stated that the MISO's review also indicates that the interim targets in the proposed rule will require significant CO2 reductions in the 2020 tim eframe. Commenters stated that t his study indicates that this short timeline may not allow cost

- effective, long

- term planning. Commenters stated that i f coal plant retirements are part of the compliance strategy for 2020, corresponding capacity additions ( for reliability and resource adequacy) in a two

- year window will be difficult if not impossible. Commenters stated that the MISO's experience is that new gas plant construction typically requires three to six years. Commenters stated that i f new transmissi on and gas pipeline additions are needed to accommodate the capacity expansion, this timeline may be even longer. Commenters stated that t his finding suggest that in order to meet the 10

- year average identified in the proposed rule, it is likely that entit ies will need to take immediate action. Commenters stated that s ince it is possible that state plans will not be finalized until the 2018

- 19 timeframe, there will be little time for decisions and implementation for infrastructure changes before 2020.107 Comme nters stated that in Minnesota it invested significant amounts of capital in upgrading existing plants and reducing pollution over the past two decades. Commenters stated that most of the loans secured for those upgrades and environmental improvements were based on certain levels of production at those plants. Commenters stated that operating those plants at significantly reduced levels could conceivably threaten its ability to service existing debt and create millions of dollars of stranded assets.

Comment ers stated that MP&W exists to serve the local community in Muscatine, Iowa. Commenters stated that as the municipal utility, there is only the local generating station that must bear the burden and cost of compliance with the proposed 111 (d) rule, not a fleet of units across a region. Commenters stated that regulation that impacts the local cost to produce reliable power is borne by our local residents and businesses.

Commenters stated that EPA's cost analysis is further flawed because it failed to consid er lost revenue in its analysis. Commenters stated that in EPA's proposed rule for standards of performance for GHG emissions from new EGUs, EPA stated that a proper cost analysis must consider 'revenue enhancement.' Commenters stated that revenue enhancem ent is 'generated by the sales of any by

- products of the control process.' Commenters stated that because EPA considers revenue enhancement an essential cost offset, it likewise must consider lost revenue of saleable by

- product a cost deficit.

Commenters s tated that the proposed rule threatens to substantially raise electric rates in Wyoming. Commenters stated that the incremental cost of compliance for Wyoming utilities would likely be several billion dollars on a net present value basis. Commenters stated that compliance costs will increase the cost of providing electric service, which costs will in tum be passed on to residents and businesses (including WMA's members) in Wyoming in the form of higher rates.

Commenters stated that proposed CPP will change the market dispatch of generating units by reducing the availability of the most economic generating resources. Commenters stated that such a shift will cause higher market clearing prices in the SPP region resulting in material adverse economic impacts on SPP customers. Commenters stated that the proposed CPP will increase reliance on renewables and generators fueled by natural gas, yet there has been no evaluation of additional operating and planning measures needed to support integration of significant a dditional renewables and of natural gas availability required to fuel the increased number of gas burning units in the SPP region.

Response 7: EPA’s analysis of two illustrative compliance approaches is a reasonable estimate of the costs and benefits of th e final rule. The projected costs of compliance with the final rule amount to a 4 percent increase in the cost of meeting electricity demand, while securing public health and welfare benefits that are several times greater. Furthermore, retail electricit y prices are projected to increase by less than one percent in 2030, and electricity bills are projected to decrease. See RIA Chapter 3.

Cost

- effectiveness was, in fact, considered in the final rule. See Sierra Club v. Costle, 657 f 2d at 337

- 38 (costs fo und to be reasonable under section 111 (a) based on considerations of cost effectiveness). As discussed in section V of the final rule preamble, the cost effectiveness of the108 CPP compares favorably to the cost effectiveness of the EPA standards controllin g GHG emissions from light duty vehicles, and from heavy duty vehicles and engines, standards both EPA and the Department of Transportation have uniformly found to be highly cost

effective. See 2012

- 2016 light duty standards (entire fleet) $50 ton CO2e in 2030; $40 per ton CO2e in 2050. 75 FR at 25515 (May 7. 2010); Phase 1 heavy duty pickups and vans $90 ton CO2e in 2030; 76 FR at 57228 (Sept 15, 2010); Phase 1 heavy duty vocational vehicle standards $20 ton CO2e in 2030; 76 FR at 57234; Phase 1 heavy d uty engine standards $20 ton CO2e in 2030. 76 FR at 57238; Phase 1 heavy duty tractor standards $20 ton CO2e in 2030. 76 FR at 57213; Light duty trucks 2017

- 2025 $142 ton CO2e [$85 per ton in 2050] 77 FR at 62922 (Oct. 15, 2012); Light duty cars 2017

- 2025 $128 ton CO2e [$80 in 2050] id. Combined fleet 201702025 $132 ton CO2 e in 2030 and $82 ton CO2 e in 2050; id.

The final rule includes an extended start date of 2022, an emission reduction glide path, and the ability to average across time periods. See p reamble for further discussion.

The final rule does not mandate unit

- level requirements, and instead offers flexibility in the design of state plans. See Section VIII of the final rule preamble for further discussion of state plans.

EPA’s cost estimates a re reasonable. The cost estimates presented in the RIA do are compared against a future baseline, and both cases incorporate costs net of revenue enhancement. These estimates include additional costs related to natural gas pipeline development required t o fuel increased gas burning units.

See section 5.11 of this document for EPA’s response to comments relating to stranded assets.

Co mment 8: Commenters states that the total demand for coal (and the price) will not drop because of export demand so electricity prices will not fall as the EPA predicts. The commenters estimates that this will add $1.6 billion per year to the compliance cost.

Commenters stated that the IPM, says that compliance will cost between $7.3 and $8.8 billion which may be too l ow as ERCOT just completed a $6 billion upgrade of their electric grid infrastructure to support 12 to 18 gigawatt hours of transmission from West Texas to East Texas. The commenters stated that based on his calculations the IPM estimate is about an order of magnitude low and needs to be revisited and recalculated.
Commenters estimated that the CPP as proposed would cost the state of Kansas $8.75 billion with a possible range of costs between $5 billion and $15 billion. The commenters estimated that the c ost to Kansas associated with the additional generation resources will be $3.25 billion. The commenters also estimated an additional $1 billion cost for new infrastructure to support water and/or natural gas pipeline capacity. The commenters estimated co sts of $2 billion for additional transmission allocated to Kansas ratepayers as a result of the CPP.109 Commenters stated that EPA's Regulatory Impact Analysis used annualized energy efficiency costs as part of their summary of compliance costs, which has the impact of pushing costs out into the future and making the compliance spending in 2020, 2025, and 2030 appear lower than it would actually be.

Commenters stated EPA's Regulatory Impact Analysis (RIA) for the CPP projects national costs of $5.4 to $7.4 bi llion annually in 2020. Commenters further stated that the EPA's projections assume billions of dollars of offsetting annual savings from reductions of electric demand through widespread investments in energy efficiency measures.

Commenters stated that the NODA proposes substantial modifications to the CPP which, if implemented, will have a crippling impact on EGUs within North Dakota and other states and that EPA has not met its obligation to account for these impacts (reliability of electricity production , economic volatility, loss of jobs). The commenters stated that the NODA risks destabilizing electricity production in North Dakota, which is particularly important during North Dakota's long winters due to fuel availability. The commenters cited a NERA study which concluded that implementation of the CPP as written will cause a 12

- 17% increase nationwide (11

- 22% in North Dakota) in electricity prices for consumers. The commenters stated that EPA did not consider the additional costs created by ramping u p its regulations with the modifications announced in the NODA.

Commenters stated that the data upon which EPA based its IPM modeling contained errors and false assumptions, resulting in inaccurate projections that do not reflect Florida's actual complianc e costs. The commenters stated that EPA's IPM projections also do not consider the substantial stranded assets that would result from forcing units to retire prior to the end of their useful life, as well as the additional cost of developing the infrastru cture and new generation to replace those units. The commenters stated that EPA should correct all errors and inaccurate assumptions in its data, take into account the costs associated with stranded assets and replacing retired units, re

- model the Base Cas e and Policy Case scenarios to more accurately assess the proposal's impacts, and then give stakeholders an opportunity to comment on EPA's revised projections.
Commenters cited a NERA study estimating the costs of the proposed rule at $41 to $73 billion per year. Commenters cited a study by Energy Ventures that estimates that energy regulations, including the Clean Power Plan, cumulatively would increase the cost of electricity and natural gas by nearly $300 billion nationally in 2020 compared with 2012, and that gas bills would increase by 51 to 61 percent and industrial electricity rates would increase 74 percent in nominal
terms.

Commenters stated that both the survey results and modeling analysis indicate that the environmental regulations evaluated in this assessment are likely to result in retirements of a significant amount of existing generation capacity. Commenters stated that the Clean Power Plan will also require significant amounts of generation from renewable sources to meet the proposed CO2 li mits. Commenters stated that both unit retirements and new renewable generation could impact the ERCOT transmission system.110 Commenters cited compliance cost estimates by Energy Ventures of $407 billion over a ten

- year period for the mass

- based option and N ERA of $366 to $479 billion over a 15

- year period for the rate based option. The commenters stated that these estimates do not include (1) new transmission investments to access more remote high wind areas and to react to changes in power flows; (2) additi onal transmission ancillary services to handle greater amounts of variable wind and solar generation; (3) higher gas rates from increasing costs for pipeline compression; and (4) GDP changes triggered by raising energy prices. The commenters stated that mo re than 40 states will see double digit increases in electricity prices and 14 or more states will experience increases that exceed 20 percent. The commenters stated that EPA's prediction of the impacts of the UMATS rule was inaccurate.

Commenters stated that EPA's proposal does not recognize approximately $10.5 billion in investments in clean renewable energy, and threatens Wisconsin's ability to continue to meet the energy needs of its citizens. The commenters estimated the cost of compliance with this p roposal to be $3.3 to $13.4 billion for Wisconsin, not including any costs related to additional infrastructure needs associated with this rule, such as natural gas infrastructure necessitated by increased gas use contemplated under this proposal, or the n eed for new transmission lines. The commenters stated that the EPA's plan does not consider "stranded costs," which are those investments that have been made in coal

- fired power plants that may need to be retired earlier than anticipated due to the requir ements contained in this rule proposal.

Commenters stated that EPA's IPM projections do not consider the substantial Florida state

- wide stranded assets that would result from forcing units to retire prior to the end of their useful life, as well as the add itional cost of developing new generation to replace those units. The commenters stated that these costs will be substantial if, as EPA's IPM projections indicate, over 90% of Florida's coal generation is forced to retire before the end of its useful life. The commenters stated that EPA should correct all errors and inaccurate assumptions in its data, re

run the model and then provide stakeholders an opportunity to comment on EPA's revised projections.

Commenters stated that under the Clean Power Plan, the generation from Kansas's coal

- fired fleet must be significantly reduced or eliminated results in significant stranded costs to Kansas ratepayers. The commenters stated that Kansas ratepayers must continue to pay for coal

- fired generation resources (inclu ding the recent environmental upgrades) that will either be curtailed or forced to retire early as pay for the new generation, transmission, and DSM energy efficiency costs required under the Clean Power Plan. The commenters stated that because stranded in vestments are excluded, the EPA's projected compliance costs are significantly understated. The commenters stated that the EPA should grandfather (exclude) all of the Kansas coal

- fired generation resources that have undergone environmental retrofits from the Clean Power Plan. The commenters stated that the law is clear that the remaining useful life of EGUs must be taken into account and that EPA cannot and should not ignore this factor.

Commenters stated that utilities have made significant investments i n EGUs to continue their operation for the foreseeable future, and in response to the CAIR, CSAPR, BART, Visibility and MATS rules, the utilities have recently had considerable expenditures. The commenters stated that EPA must include current unpaid costs for individual EGUs in its costing analysis. The111 commenters stated that these expenditures will impact the way IPM dispatches resources or, at a minimum, affect the total cost of the proposed CO2 rule.

Commenters stated that EPA's analysis of the cost of i ts Clean Power Plan is significantly understated. Commenters stated that EPA estimates that the annual incremental cost of its plan could range from approximately $4 billion to almost $9 billion, yet independent analyses estimate costs as much as $28 billi on annually. Commenters stated that EPA estimated nationwide electricity prices would increase between 6 and 7 percent in 2020, but NERA estimated that average U.S. electricity prices actually would increase by 12% per year and the total costs of the rule could be between $366 billion to $479 billion over a 15 year timeframe. Commenters stated that energy cost increases disproportionately burden low and middle

- income families, who spend a higher percentage of their income on energy costs and are the least c apable of absorbing further increases. Commenters stated that EPA has not considered power plant retirements and fuel switching which would strand energy investments. Commenters stated that higher costs would also result in net job losses for the American economy and reduce the competiveness of American manufacturing. Commenters cited a study by the U.S. Chamber of Commerce's Institute for 21st Century Energy estimating that the Clean Power Plan would reduce the nation's GDP by an average of $50 billion an nually over the next seventeen years and cause an average decrease of over 200,000 jobs.

Commenters stated that it supports cost

- effective action to reduce GHG emissions in a manner that will not impair manufacturing competitiveness.

Commenters stated that the Proposed Standard does not provide the certainty that producers need in order to assure that they will continue to receive an affordable and reliable supply of energy. Commenters stated that the EPA's estimates project that the Proposed Standard will cause nationwide electricity price increases averaging between 6 and 7 percent in 2020 and up to 12 percent in some locations. Commenters stated that the EPA estimated annual compliance costs between $5.4 and $7.4 billion in 2020, rising up to $8.8 billion in 2030. Commenters stated that these are power sector compliance costs only and do not capture the subsequent adverse spillover impacts of higher electricity rates on overall economic activity.

Commenters stated that the EPA's so

- called 'costs' are simpl y the costs of building block 4 (energy efficiency program and customer costs) offset by the reduction in generating sector supply costs. Commenters stated that the EPA's view of costs for the entire United States ($7

- 9 billion per year) is lower than the Texas costs projected by NERA ($10

- 11 billion per year). Commenters stated that the EPA's cost estimates are fundamentally flawed.

Commenters stated that the EPA's calculated costs are based on the EIA's levelized cost of electricity (LCOE) estimates, sugg esting that the cost of energy substitutes can be measured solely through the LCOE metric. Commenters stated that the citation EPA used from the EIA, 'The LCOE values for dispatchable and non

- dispatchable technologies are listed separately in the tables, b ecause caution should be used when comparing them to one another' (EIA, 2014). Commenters stated they do not believe the EPA exercised enough caution and consequently systematically underestimated the cost of implementation, reporting a low, narrow cost ra nge of only $7.3

- $8.8 billion.112 Commenters stated that during the years 2007

- 2012, there was approximately $1,038 million of investment in renewable energy and $353 million of investment in energy efficiency in the North Carolina. Commenters stated that t his existing investment, together with anticipated investment, is projected to have a profound impact and positions North Carolina well to comply with the portions of Building Block 3 having to do with renewable generating capacity and Building Block 4. Co mmenters stated that prospective calculations based on cost performance of clean energy technologies under current North Carolina policies have shown that developing a robust clean energy economy will result in savings for consumers in North Carolina.

Comm enters stated that the Pace Global's analysis of Arizona's compliance implications finds that the rule is neither flexible nor achievable and that implementation of this plan without modifications would result in severe impacts to the reliability of electr ic supply in the state and excessive cost implications for Arizona customers. The CPP is projected to increase fuel and purchased power costs by 40% and generation capital expenditures by 30%.

Res ponse 8: EPA analysis projects a minor decrease to coal pric es under the two illustrative compliance scenarios analyzed, and does not expect a significant increase in coal exports as a result of this rule. See Chapter 3 of the RIA

The presentation of annual costs in the RIA is appropriate. To estimate annualized costs, EPA uses a conventional and widely

- accepted approach that applies a capital recovery factor (CRF) multiplier to capital investments and adds that to the annual incremental operating expenses.

The power industry’s “compliance costs” are represented i n this analysis as the change in electric power generation costs between the base case and illustrative CPP scenarios, including the cost of demand

- side energy efficiency programs and measures and monitoring, reporting, and recordkeeping (MR&R) costs.

EPA’ s analysis of two illustrative compliance approaches is a reasonable estimate of the costs and benefits of the final rule. This modeling reflects a number of updates, including revised unit

level specifications (e.g., control investments) and planned new power plant construction and closures. See Chapter 3 of the RIA.

EPA conducted an analysis of the impact of the CPP on employment in chapter 6 of the RIA. EPA projects there will be job

- year losses in the fuel extraction industries such as coal mining,

w hile there will be gains in jobs in energy efficiency industries. Secondary market impacts of the guidelines such as impacts on industrial customers are discussed in the RIA in chapter 5.

The RIA presents a reasonable estimate of costs for two illustrativ e compliance scenarios. The projected power sector costs presented in the RIA rely on the generator cost and performance assumptions documented in Chapter 4 of the IPM documentation, and not solely on EIA’s LCOE estimates.

Comm ent 9: Commenters stated th at States have enacted "Property Assessed Clean Energy" legislation on their own. The commenters stated that to the extent that implementation of structured financial products can be integrated as part of 111(d), or as part of an official tool kit113 for sta tes, it will help states meet their emissions reduction goals in the most cost

- effective

manner.
Response 9: Thank you for your comment.

Comment 10: Commenters recommended changing state policies that keep the cost of power at the lowest possible levels a nd thus cause utilities to minimize staffing and retain obsolete equipment. The commenters stated that the costs of compliance should be shared and not borne entirely by the power producers but also by consumers.

Commenters stated that EPA has purported t o calculate general societal costs compared to world

- wide benefits. The commenters stated that EPA should distinguish between regulated utilities and deregulated utilities as regulated utility rates must be set at a level that covers not only the cost of o perations of a well

- managed utility but an amount adequate for a return on, and replenishment of, capital.

Commenters stated that coal

- fired EGUs would not experience EPA's predicted, average national costs, but would experience costs specific to their fa cilities. The commenters stated that EPA has not made a determination that the costs for Pennsylvania

- or any other state

- are reasonable, notwithstanding that the rule would require compliance on a state

- by

- state basis. The commenters stated that the Pr oposed Rule makes no allowance for the fact that the additional costs of controlling CO2 emissions come on top of previous environmental investments made by affected facilities and that imposing new costs can severely limit the ability of a facility to
ope rate and generate needed revenue.

Commenters stated that EPA must ensure that costs incurred under any requirement for the "best system of emission reduction" (BSER) are minimized by providing states maximum flexibility in determining BSER and allowing maximum flexibility in compliance options. The commenters stated that States must be able to set compliance deadlines that allow utilities to pay off existing debt on their power plants and pollution control equipment. The commenters stated that since 2000 , Wisconsin utilities have invested over 3.2 billion dollars in air pollution control equipment and efficiency upgrades for existing power plants, and that setting fixed compliance dates could strand this debt and make the installation of new, cleaner repl acement generation more costly.

Commenters stated that environmental compliance costs associated with the Clean Smokestacks Act, including early coal plant retirements, have not yet been fully recovered through utility rates. The commenters stated that to the extent that North Carolina utilities must retire additional coal plants to comply with the Proposed Rule, ratepayers will be required to bear the burden of additional environmental compliance costs and such retirements must necessarily occur at plants where significant costs have already been incurred to improve air quality, thus stranding the significant investment the utilities and their North Carolina ratepayers have made over the past decade.

Commenters stated that the negative impact to the utiliti es' associated with their ability to recover existing costs and the additional costs that they will incur to comply. Commenters also stated that t he negative impact to the utilities associated with risk being added to their ability114 earn a fair returns and their ability to attract capital. Commenters further stated that the negative impact to the utilities associated with any responsibility they may experience due to being made responsible for unrecovered costs that are currently justified because the plants in question are used and useful, which would not be the case if plants are shuttered or if plant output is reduced.

Resp onse 10: Regarding geographic scale of benefits, see section 8.7.2, comment 3.

The retail price estimates presented in Chapter 3 of the RIA do, in fact, distinguish between regulated and deregulated utilities.

For a discussion of cost

- reasonableness of BSER, see section V of the preamble.

See section VIII of the preamble for a discussion of flexibilities available in state plans.

Co mment 11: Commenters stated that EPA cost analysis is incomplete.

Commenters questioned EPA's conclusion that the proposed rule is BSER because EPA does not provide a cost analysis of its proposed BSER for existing fossil

- fired EGUs. The commenters stated that they estimated the total cost of collectively implementing EPA"s four Building Blocks may cost up to $1.1 trillion between 2020 and 2029, which cannot be considered reasonable. The commenters further stated that the proposal fails to be cost effective eve n after 2029, at which time EPA estimates the nation will spend an estimated $46 billion to achieve Building Block 4 alone until all affected facilities are retired.

Commenters stated that EPA has attempted to mask the cumulative cost of its BSER determin ation by only analyzing the costs of its individual components, that EPA's cost analysis fails to account for numerous costs associated with each of the proposed Building Blocks and that EPA has not evaluated the combined cost of the four Building Blocks a s a system as required for a BSER determination. The commenters further stated that the cost analysis is therefore indefensible and EPA's BSER determination is legally deficient.

Commenters stated that while analyzing the precise impacts of EPA's proposal is extremely difficult for reasons such as the uncertainty associated with the content of EPA's final guidelines and associated with the content and timing of state plans, EPA has incompletely, inadequately and grossly underestimated the potential cost of compliance. The commenters remarked that more accurate cost assessments cannot be compiled until state plans are approved and until there is clear guidance on ultimate compliance requirements, which will not occur until mid

- 2017 at the absolute earliest.

Commenters suggested that IPM cost modeling should consider costs of required electricity transmission upgrades and pipeline upgrades beyond existing pipelines. The commenters stated that substantial new electricity transmission, which cost $2.3 million p er mile, and pipeline investments, which cost close to $4 million per mile, will be required to implement Building Block 2 and maintain sufficient reliability safeguards. The commenters further stated that these costs are neither accounted for by the IPM n or assessed in EPA's RIA, that the infrastructure costs necessary to accommodate both locational shifts and shifts in fuel type such shifts are115 completely ignored, and that EPA's suggestion that states have the "flexibility" to undertake different measures if they find such costs to be too great is neither accurate nor defensible. The commenters concluded that EPA cannot simply impose burdens on the states without a full analysis of the costs of such burdens.

Commenters stated that EPA has not accounted for the costs of creating and maintaining a public recordkeeping database in the RIA of the proposed section 111(d) rule.

Commenters stated that consideration of "cost" in determining the BSER, should include all of the human costs of climate change born by t he public, including but not limited to climate

related costs to public health, ecosystem services, national security, and natural disasters.

Commenters stated that total benefits would be less than $100 Billion but the total consumer energy costs would b e in excess of $360 Billion, and the loss of disposable income under this rule will result in 30,000 premature deaths. The commenters stated that EPA did not consider all the benefits of increased levels of carbon dioxide, especially on crop production an d resulting reduction in human suffering, starvation and disease.

Commenters stated that EPA's technical memo on cost considers only Building Blocks 1 and 2 and EPA should consider costs for all four Building Blocks and include an estimate of the costs

ass ociated with stranded assets due to this rulemaking. The commenters stated that the 2.7

- 4.4% electricity cost increases included in the technical memo are highly uncertain due to the complexity of the plan and length of implementation.

Commenters stated that EPA must re

- propose the rule for additional review, analysis and comment after refining requirements, because the rule as proposed contains ambiguity that prevents the PSCW from accurately assessing the total cost impact on Wisconsin citizens. The

com menters stated that States must be allowed to fully understand the cost impacts based on clearly defined parameters before the rule is finalized

. Response 11: Regarding commenters’ argument that EPA cannot impose burdens on states without a full analysis of the costs of such burdens, it should be noted that the costs realized by states to develop their state plans for the period 2016

- 2018 were developed and reported in the Supporting Statement for the proposed rule. Please refer to document EPA

- HQ

- OAR

- 0602

- 0438. In addition, costs were calculated for the compliance years of 2020, 2025 and 2030 and tabulated in the Regulatory Impact Analysis, Section 3.11, which can be found in the docket at EPA

- HQ

OAR

- 0602

- 0391.

Regarding commenters’ argument that EPA has n ot accounted for the costs of creating and maintaining a public recordkeeping database, see RIA Chapter 3.

See section V of the final rule preamble for a discussion of cost

- reasonableness of the building blocks.

Because of the range of choices available to states and the lack of a priori knowledge about the specific choices states will make in response to the final goals, the RIA presents two illustrative scenarios designed to achieve these goals. These results from these two approaches represent reasonabl e estimates of the impact of this rule. For further discussion, see RIA Chapter 3.116 Cost

- effectiveness was, in fact, considered in the final rule. See Sierra Club v. Costle, 657 f 2d at 337

- 38 (costs found to be reasonable under section 111 (a) based on co nsiderations of cost effectiveness). As discussed in section V of the final rule preamble, the cost effectiveness of the CPP compares favorably to the cost effectiveness of the EPA standards controlling GHG emissions from light duty vehicles, and from hea vy duty vehicles and engines, standards both EPA and the Department of Transportation have uniformly found to be highly cost

effective. See 2012

- 2016 light duty standards (entire fleet) $50 ton CO2e in 2030; $40 per ton CO2e in 2050. 75 FR at 25515 (May 7. 2010); Phase 1 heavy duty pickups and vans $90 ton CO2e in 2030; 76 FR at 57228 (Sept 15, 2010); Phase 1 heavy duty vocational vehicle standards $20 ton CO2e in 2030; 76 FR at 57234; Phase 1 heavy duty engine standards $20 ton CO2e in 2030. 76 FR at 57 238; Phase 1 heavy duty tractor standards $20 ton CO2e in 2030. 76 FR at 57213; Light duty trucks 2017

- 2025 $142 ton CO2e [$85 per ton in 2050] 77 FR at 62922 (Oct. 15, 2012); Light duty cars 2017

- 2025 $128 ton CO2e [$80 in 2050] id. Combined fleet 2017020 25 $132 ton CO2 e in 2030 and $82 ton CO2 e in 2050; id.

R egarding the consideration of potential benefits of increased CO2 emissions, see 8.7.2, comment 1 for broad discussion about the integrated assessment models’ treatment of climate change impacts (p ositive and negative) and 8.7.2, comment 6 for discussion specific to the integrated assessment models’ treatment of carbon fertilization in the agriculture and forestry
sectors.

With regard to the commenters that asserted EPA must reanalyze the impacts of the CPP and re

propose the CPP, the EPA rejects this suggestion. EPA has conducted an in

- depth analysis of the benefits and costs of both the proposal and final emission guidelines. This analysis is contained in the RIA for the proposal and final rule

. Additional information is available in the GHG Mitigation Measures for the Final CPP TSD, the CO2 Emission Performance Rate and Goal Computation TSD for the CPP Final Rule, the Evaluation, Measurement and Verification Guidance for Demand

- Side Energy Effici ency TSD, and in additional analyses conducted for the rulemaking included in the docket such as the IPM runs conducted for the rulemaking.

Comment 12 : Commenters cited a 2013 University of Maryland study on energy efficiency grants showed free

- ridership (recipients getting grants for something that they would have done anyway) at up to 89%. The commenters suggested that the energy efficiency cost savings should be revised to zero, and the net compliance cost increased to $52 billion.

Re sponse 12: The EPA ’s estimates of demand

- side energy efficiency costs are based on expenditures and reported net savings (accounting for the effects of free

- ridership) from an extensive survey of ratepayer

- funded energy efficiency programs across the U.S. The analysis of de mand

- side energy efficiency costs, including a discussion of free ridership, is presented in the Demand

- Side Energy Efficiency Technical Support Document.117 Comment 13: Commenters stated that according to an analysis by NERA Economic Consulting, the propose d rule would conservatively cost the economy at least $41 billion per year in compliance and over $366 billion in cumulative costs from 2017

- 2030. The commenters stated that EPA continues to recycle and double count the same public health co

- benefits cla imed under previous air quality rules in its zeal to shut down coal plants and apply them to the Section 111(d) proposal in order to justify the exorbitant cost to the economy.

Response 13: The RIA presents costs and benefits incremental to a base case, wh ich includes the costs and benefits of other air quality rules. As such, the estimated incremental costs and benefits are attributable solely to the illustrative compliance approaches analyzed. See RIA Chapter 3.

Comment 14: Commenters stated that const ruction decisions are made based on price signals and that reliability and adequacy could be affected if the revenue streams in the existing competitive market are disrupted.

Commenters stated that the SPP indicates that in its region, as many as eight yea rs have been required to study, plan and construct new transmission facilities. Commenters stated that compliance with the proposed rules becomes an issue if new transmission facilities are required to meet capacity. Commenters stated that capital and fina ncing needs, technical and logistical needs, site permitting and land lease agreement requirements are all issues or constraints that need to be addressed prior to any construction, whether it is construction of additional transmission lines, pipelines or generation facilities.

Response 14: EPA does not agree that revenue streams in competitive markets will be disrupted. EPA has designed the final rule to be consistent with economic dispatch and associated price signals, and believes these will continue t o be the basis for competitive market developments. EPA has also extended the start of the compliance period and adjusted the path to the 2030 goals in the final rule; this will allow a longer timeframe for infrastructure development to align with any adj ustments to current schedules. The rule also requires states to consult with relevant reliability entities in developing plans and has provided a reliability safety valve mechanism is plans breakdown unexpectedly in emergency situations (See Preamble Sect ion V I II.G.2.)

Comment 15: Commenters noted that the guidelines do not address the fact that "states that have reduced emissions likely already have undertaken those reductions that were most cost effective and, in order to meet EPA's proposed goals, now must pursue more expensive reduction options." Commenters noted that actions "to deploy renewable generation, replace aging coal plants with NGCC units or invest in EE programs does not reduce the costs of expanding these efforts going forward." Commenters noted that "Those states have already 'picked the low

hanging fruit' and now must invest more to further reduce their emissions than their neighbors who have not already u ndertaken significant actions to reduce their emissions."118 Commenters stated that the proposed standards are so stringent that if all of the building blocks proposed by EPA were successfully implemented in TEC's service territory to the fullest extent, TEC's CO2 emission rate could not be in compliance with EPA's proposed limit. The

commen ters cited an evaluation by FCG indicating that the entire state of Florida could not meet the limit utilizing the currently existing affected sources and that the only way to meet EPA's proposed numeric goal is to discontinue operating existing coal units and replace the energy with substantial new zero

- emitting electricity generating technologies at great expense. Commenters stated that retiring these existing coal units would result in substantial stranded assets and thus substantial costs to customers, a result contrary to the EPA's objectives as stated by EPA leadership. Commenters stated that TEC's substantial CO2 reductions resulted from an agreement with EPA in the form of a consent decree and as a result of this agreement with EPA, its customers ha ve made a substantial investment to make early reductions and EPA's Proposed Rule does not account for this bold and early action. Commenters stated that the proposed goal could not be reached by reasonable measures utilizing all blocks and is therefore de void of the claimed flexibility.

Commenters stated that the EPA should withdraw its proposed existing source performance standards (ESPS) because alleged flexibility will result in the federal government picking winners and losers and merely hiding the cos ts through mandates, subsidies, taxes and other mechanisms that shift the costs to Americans.

Response 15: EPA disagrees with this comment. See preamble section V and GHG Mitigation Measures TSD for a discussion of cost

- effective CO2 reduction potential.

Additionally, EPA believes that the final emission performance rates are achievable. See section s VI and VII of the final rule preamble.

Comment 16: Commenters stated that he costs that will be incurred by state agencies alone, attempting to administer this proposal, will be enormous and that the new program will take more than two staff persons per state. The commenters stated that the level of analysis, the level of reporting, and the staff time to address NSR and permitting issues will be a colossal d rain on resources, and U.S. EPA is providing no additional funding to states to administer such an enormous project. The commenters stated that predicted electric power generation costs and annual incremental compliance cost (including monitoring, reportin g and recordkeeping) seem staggering.

Response 16: EPA disagrees with this comment. See RIA Chapter 3 for a discussion of the costs of the final rule, including estimates for monitoring, reporting, and recordkeeping.

Comment 17: Commenters stated that m uch of the proposed rule relies on states to develop and implement state

- specific plans and regulate areas that they have not in the past and that States are not staffed to implement the rule without additional funding and authority that would need to be

a ppropriated through the legislative process.119 Commenters stated that Arkansas will require significant resources, which are not available at the state level, to develop and implement a successful Plan and needs EPA to provide additional financial resources to facilitate states' abilities to conduct their Section 111(d) planning and implementation.

Commenters further stated that EPA must provide financial assistance to help states with the development of state or multistate plans.

Commenters stated that EPA provide state and local agencies with the significant additional resources needed to make the Clean Power Plan a success. Commenters urged EPA to build upon its strong foundation of pre

- proposal dialogue to develop resources to facilitate states' abilities to conduct their Section 111(d) planning.

Response 17: See response to comment 1 in section 9.4 of this response to comment document

.

Comment 18: Commenters stated that in the absence of guidance from EPA, and assurance that reasonable coordination appro aches and/or trading mechanisms will be acceptable and accounted for in determining future compliance, states will be forced to plan for standalone compliance, which may foreclose lower

- cost compliance opportunities. The commenters stated that the Clean Po wer Plan contemplates a filing date as late as June 2018 for multi

- state plans, and it is unknown how long it will take EPA to review and either approve or reject such plans. The commenters stated that compliance would require that certain efforts be in p rogress prior to EPA approval, and could entail irreversible actions, such as coal plant retirements, that would increase compliance costs and reduce opportunities for less

- costly coordinated action.

Commenters stated that the proposal fails to address the critical issues of how the costs of the renewable resources needed to attain state goals will be allocated and who has the responsibility to mandate such allocations, and thus there can be no meaningful opportunity for comment on the implications of the P roposed Rule. The commenters stated that renewables take up to 5 to 10 years to build. The commenters stated that time is needed for permits for associated environmental issues such as endangered species, permits to cross federal lands under the National Forest Management Act and/or the Federal Land Policy and Management Act, state water quality permits; fish, game, and other wildlife related permits, National Historic Preservation Act consultations, rights

- of

- way permits on tribal land and public lawsuits . The commenters stated that transmission infrastructure is subject to delays to resolve the mechanisms by which costs are recovered for new transmission and how they are divided among different users and customers and equity issues because customers and regulators in one State may object to paying for benefits that accrue to customers in another State. The commenters stated that renewable energy integration costs and bulk storage costs may be issues in the near future.

Response 18: EPA disagrees with this comment. See preamble section VIII for discussion of the range of available compliance flexibilities. Additionally, note that the start date of the interim period is 2022 in the final rule, allowing for additional time.

T he comment on cost allocation is unclear. Regarding timing and achievability of new renewable generation, see section V.E. of the preamble and the GHG Mitigation Measures TSD.120 Comment 19: Commenters stated that the equivalent of 5,000 to 20,000 MW of new zero

emitting capacity will nee d to be added in Florida, which is a substantial increase, especially when compared to Florida's current total capacity of 55,000 MW. The commenters stated that the Proposed Rule does not provide sufficient time to site, construct, and optimize the operat ion of the requisite solar energy needed to meet the current targets.

Response 19: See preamble section V.E for discussion of BB3 under the final rule, and section VIII for a discussion of available flexibilities in state plan development.

Comment 20: Com menters stated that the EPA has not undertaken a state

- by

- state analysis of the costs and reliability impact of meeting the goal established for each state. The commenters stated that to ensure that the Clean Power Plan does not threaten adequacy or relia bility of the electric power system, or place unreasonable cost impacts on electric consumers, the final rule should allow states the ability to analyze the effects and be given the flexibility to decrease the stringency of the emission rate goal within li mits approved by EPA, or extend the compliance deadline, to mitigate significant adverse reliability or cost impact forecasted by such state analysis.

Response 20: EPA has addressed reliability in the final rule by requiring states to consult with relevant reliability entities in developing plans and by providing a reliability safety valve mechanism where unanticipated events conflict with the plan in emergency situation and cause reliability emergencies (See Preamble Section V I II.G.2.) See also the RIA fo r cost impacts and the Resource Adequacy and Reliability Analysis TSD for resource adequacy and potential concerns about reliability.

Comment 21: Commenters stated that when analyzing the economic impact of redispatch, EPA cannot rely on regional complian ce to minimize the cost of compliance under Section 111(d). The commenters expanded that EPA/s authority under Section 111(d) is to provide guidance to the states in their efforts to establish performance standards for the sources subject to Section 111(d) and EPA has no authority to compel states to enter into regional or multi

- state compacts and, in many cases such compacts are politically unrealistic and economically impracticable. The commenters concluded that EPA's economic impact analysis must be base d on compliance assumptions that are legally supportable and not on EPA's aspirational objectives of how states should behave.

Response 21: The economic impact analysis presented in the RIA includes two illustrative compliance approaches. In each of those approaches, affected EGUs in each state are required to meet the state goal without interstate trading. In the rate

- based approach, states are able to procure generation from new renewables and demand

- side energy efficiency. For more information, see Ch apter 3 of the RIA.121 Comment 22 : Commenters stated that When a State has a limited number of affected EGUs (in the case of South Dakota, only one), or when most or all of the EGUs are constructed in a short amount of time, the remaining useful lives of such facilities in such States may n ot be protected under 111(d)(1). The commenters stated that Forcing premature retirement by limiting hours of operation of these facilities that all have similar remaining useful lives will result in stranded investment and considerable premature and uneco nomical investment in new resources and recommended allowing them to operate at an economical level through their remaining useful lives in exchange for a lower rate of emissions over the rest of the defined period of time.

Commenters stated that the prop osed rule reduces the costs of compliance by establishing a base year that coincides with a peak in emissions, a long implementation period, and a wide variety of allowed methods. The commenters stated that with these flexibilities, the proposed rule will require the replacement of only equipment with a long time in service (in many cases more than sixty years), not equipment recently purchased.

Commenters stated that expected retirements (about 120,000 megawatts) are enough to power about 60 million homes

-- half of America's households. The commenters stated that many of these units recently received emission control upgrades costing billions of dollars nationwide, which means that investments customers have made in power plant emission controls to meet

o ther EPA requirements will be prematurely lost.

Commenters stated that its business model includes a minimum original EGU funding structure of 30 years with modifications to this funding structure to account for efficiency improvements and that without the requirements of Section 112 of the CAA, its rate payers would receive a benefit of approximately 10 years of no debt payments for the final one to two decades of the life of its power plants. Commenters stated under the proposed rule the commenters would have to prematurely shut down its newest or youngest coal plants (1987 and 1996 vintage) and remaining debt would be borne by ratepayers. The commenters stated that the United States Congress set an energy policy which banned the use of natural gas for n ew baseload power generation (reversed in 1987) which was a consideration in the permitting, design and construction of its coal

- fired units. The commenters stated that EPA's description of flexibility does not provide for the impact upon its rate payers o f which 40% earn less than $35,000 annually. The commenters stated that it has been making significant investments to comply with the requirements of the UMAT's and CSAPR to continue to utilize its coal fleet. The commenters stated the CPP would prematur ely close these plants at a great risk to reliability and cost to ratepayers.

Response 22: See section 5.11 of this response to comment document for EPA’s response to comments relating to stranded assets.

Regarding the base year, see preamble VI for discu ssion of 2012 baseline. Note that the impacts analysis presented in the RIA estimates costs and benefits against a projected future base case in each year presented in the analysis (2020, 2025, and 2030).122 Comment 23: Commenters stated that a discount rat e lower than the 3% discount used in the RIA might be appropriate and that the current low interest rates and high unemployment make GHG reduction favorable for the economy.

Commenters recommended the use of OMB guidelines which require a 7% discount rate and would raises the 2030 compliance cost from $43 billion to $52 billion, and the net cost from $9 billion to $18 billion.

Response 23: See Chapter 3.3 of the RIA. In the modeling presented in the RIA, a discount rate is used to estimate the net present value of the intertemporal flow of the annualized capital and operating costs. The optimization model then identifies power sector investment decisions that minimize the net present value of all costs over the full planning horizon while satisfying a wide range of demand, capacity, reliability, emissions, and other constraints. As explained in Chapter 8 of the IPM documentation, the discount rate is derived as a weighted average cost of capital which is a function of capital structure, post

- tax cost of deb t, and post

- tax cost of equity. While the detailed formulation of this rate is presented in the IPM documentation, the rate estimated and used in the analysis is 4.77 percent. EPA believes this rate is appropriate for power sector modeling. It is importan t to note that this discount rate is selected for the purposes of best simulating power sector behavior, and not for the purposes of discounting social costs or benefits.

Comment 24: Commenters stated that meeting EPA projected targets for energy efficien cy will require a significant increase in statewide spending and that any attended benefits to customers would be outweighed by the dramatic increases in costs. The commenters stated that in order to reach EPA's energy efficiency savings growth rate of 1.5 % of sales per year and the 9.91% cumulative savings target, the Joint Utilities' initial projections suggest that spending will necessarily increase to approximately $3.0 billion per year, or approximately 22 times the amount spent on energy efficiency in 2013. The commenters provided a figure and text explaining the Joint Utilities' assumptions and supporting evidence for estimating that program costs will rise from $250/MWh to $450/MWh in 2029. The commenters stated that Block 4 alone would have a $3 bil lion impact to Texas's electric customers.

Commenters stated that utilities will pass compliance costs to customers who may face substantially higher rates as utilities seek to recover new environmental capital expenditures, new generation, and retrofits, as well as infrastructure investments such as electric transmission and natural gas pipelines. The commenters stated that unless the rule is rewritten to reward smart investments, Michigan faces a large and artificial competitive disadvantage.

Commenters stated that EPA's goal is to shrink electricity bills, roughly 8 percent, by increasing energy efficiency and reducing demand in the electricity system. The commenters stated that reducing energy demand, leaves the utilities further lacking the revenue th ey need for the efficiencies the government wants.

Response 24: The EPA has determined not to include demand

- side energy efficiency (building block four) in the BSER of this final rule and therefore we do not need to address further123 comments supporting the removal of DS

- EE from BSER. This determination is discussed in section V.A of the final rule preamble of the CPP. Even though demand

- side energy efficiency is not being included in the BSER in this final rule and, thus, not included in the determination o f emission performance rates, the final rule provides states the flexibility to use demand

- side energy efficiency measures in their state plans for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the applicable req uirements established in section VIII of the preamble for the CPP. Accordingly, the EPA is including a level of DS

- EE as a component of our illustrative plan scenario that is the basis for the analysis discussed in Chapter 3 of the RIA that supports the fi nal CPP. EPA is reducing the level of DS

- EE in the illustrative plan scenario from the level represented in the proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. The EPA has estimated electricity savings and costs associated with the illustrative DS

- EE plan scenario. This analysis is presented in detail in the Demand

- Side Energy Efficiency TSD. Within this TSD, support is provided for the estimated costs and the pace of increased spending on EE programs as represent ed in the illustrative plan scenario. The EPA finds the pace of increase in EE program spending represented in the plan scenario to be reasonable for this illustrative analysis as it is much lower than recent industry trends. The TSD also presents a discus sion of utility regulatory models which are increasingly in use to support increased EE program efforts and associated impacts on

revenues.
See RIA Chapter 3 for a discussion of projected retail price impacts, which appropriately consider compliance cost p ass through.

Comment 25: Commenters stated that EGU heat rate improvement investments were reasonable and cost effective provided that they did not trigger additional costs as a result of New Source Review.

Response 25: See preamble section X.A. for a discussion of New Source Review.

Comment 26: Commenters stated that this is an ideal time to reduce carbon emissions because new supplies of natural gas from tight and shale formations appear to be ample and attractively priced, costs for solar panels and very energy efficient LED lighting are dropping dramatically and more efficient direct drive motors are becoming available.

Response 26: Thank you for your comment.

Comment 27: Commenters stated that the rule excessively impacted certain states.

Commenters stated that the proposed rule imposes vastly disparate impacts on states. The commenters stated that the proposed rule has dramatically different state emission reduction targets, based on a small number of assumed or administratively

- determined factors, and that these factors appear likely to impose disproportionate costs of achieving the required emission124 reductions on certain states, particularly among those that face the largest emission reductions. The commenters stated that this approach is inconsistent with the joint state

- federal approach at the heart of the Clean Air Act.

Commenters stated that Arizona is one of only two states not to see a net benefit from the proposed rule, and it also has one the highest rates of reduction. The comment ers were concerned that the proposed rule would expose Arizona rate payers to economic, health, and security risks that are unduly burdensome.

Commenters stated that the Proposed Rule provides no analysis of the critical costs of compliance on a state

- b y

- state basis. The commenters stated that this is a significant deficiency, especially when the proposed limits are vastly different from state to state and impose disproportionate costs upon states that have taken early action. The commenters stated that without a state

- by

- state analysis, there is no way any state can determine whether the costs of compliance are reasonable.

Commenters stated that Section 111 standards must reflect the degree of emission limitation achievable through application of the bes t system of emission reductions, taking into consideration cost, non

- air impacts, and energy requirements. The commenters stated that independent analyses demonstrate that the rule's actual costs could be vastly higher than those EPA acknowledges. The co mmenters cited estimates of compliance costs of $480 billion by 2030, an average annual negative impact on GDP of $50 billion, and an average annual net decrease in employment of over 200,000 jobs. The commenters stated that the South Atlantic census divi sion

- stretching from Delaware to Florida

- "would be hit the hardest in terms of gross regional product and employment declines," followed by the Midwest.

Response 27: The final rule establishes nationally uniform emission standards. For more informatio n, see section V of the preamble. EPA’s own estimate of the employment losses are more modest than the commenter suggests. Please see Chapter 6 of the RIA for more information.

Comment 28: Commenters stated that utilities are in a protected position wit h regulated and relatively predictable income streams unlike regular private industry, and that our decisions should prioritize public interest rather than mere profits.

Response 28: Thank you for your comment.

Comment 29: Commenters stated that by 2030 u nder the Clean Power Plan, the climate benefits alone from CO2 reductions amount to about 30 billion dollars annually and the corresponding health co

- benefits are valued at up to twice as much as the climate benefit portion. The commenters stated that thos e annual total benefits accrue to a range between six and twelve times the accompanying and compliance costs. The commenters stated that, according to Syracuse and Harvard University's co

- benefits report, model results consistently show air quality125 improv ements in western Pennsylvania projected to occur under this rule to be among the largest in the country.

Commenters quoted a manufacturing analysis, "Severe weather costs an auto assembly plant more in one hour than the EPA's standards will cost that plan t in an entire year".

Commenters stated that the projected increase in electric costs of 7% is affordable and cost effective.

Commenters stated that EPA has not adequately accounted for the potential impacts of the proposed rule under a full range of possi ble future market conditions, effectively hiding the true potential costs of the proposed rule. Commenters further stated that the EPA needs to provide alternative scenarios assuming some variance of the achievable rate of energy efficiency, heat rate impr ovements, and renewable developments, to paint a full picture of the potential costs of this proposed regulation.

Commenters stated that EPA used unreasonably high and out

- of

- date cost assumptions for renewable energy and energy efficiency, substantially o verstated the costs of compliance with the standard and underestimated the potential to make these critical carbon reductions. Commenters cited an NRDC study that found that by updating the cost and performance parameters for renewable generation and energ y efficiency to be consistent with today's technologies.
Commenters stated that compliance could be achieved at net savings of $1.8 billion in 2020 and $6.6 billion in 2030. Commenters cited an analysis by NRDC using the IPM model indicating that that CO2 pollution from America's power plants could be decreased by 21 to 31 percent (relative to 2012 levels) by 2020, and 25 to 38 percent by 2025. Commenters stated that these reductions are equivalent to 470 million to 700 million short tons relative to the Reference case in 2020, and 560 million to 860 million short tons in 2025. The commenters estimated cost ranges from no increase over the Reference case to about $14.6 billion in 2020, and benefits (in saved lives, reduced illness, and climate change avoid ed) of $28 billion to $63 billion, far exceeding the estimated costs. The commenters stated that EPA can strengthen the CPP at reasonable cost.

Commenters stated that there was no cost that should be equated to eliminating our moral obligation to help.

Commenters cited the Stern Review estimate that a 1% reduction in world GDP due to fossil energy restrictions would prevent a 5% reduction due to climate change. The commenters cited the IPCC that now gives the cost of mitigation at 0.6 percent of world G DP.

Commenters stated that concern that has been raised by some stakeholders is that implementation of the proposed Clean Power Plan will be prohibitively expensive. Commenters stated that with regards to the portions of Building Block 3 having to do with renewable generating capacity and Building Block 4, there is strong evidence that supporting a robust clean energy economy will produce numerous economic benefits, including costing electric ratepayers less than a 'traditional' or 'conventional' approach to serving demand. Commenters stated that a 2013 study conducted by RTI International and La Capra Associates indicates that in North126 Carolina implementation of the portions of Building Block 3 having to do with renewable generating capacity and Building B lock 4 will not increase costs borne by ratepayers.

Response 29: We agree that the climate and health co

- benefits outweigh the costs of this rulemaking, see the RIA for details about the estimated costs and benefits of the final rulemaking

Regarding renewa ble generating capacity and demand

- side energy efficiency, costs are updated in the final rule. See preamble section V.E. and Demand

- Side Energy Efficiency Technical Support Document.

Comment 30: Commenters stated that despite EPA's promise that there is "flexibility" in the proposed program, the result of the proposal is to shut down the Arizona Electric Power Cooperative, Inc. ("AEPCO") Apache Generating Station and potentially other small cooperative power plants, imposing extravagant costs and potenti ally jeopardizing the cooperatives' vital role in delivering power to rural America. The commenters requested that EPA consider creating a separate category for "small public and cooperative electric generating units" within the framework of the larger pro posal.

Commenters requested that EPA consider creating a separate category for "small public and cooperative utilities" that provides relief to these small entities, ensuring their ability to continue providing basic services, while also providing for reas onable reductions in carbon emission rate and mass. The commenters stated that its proposed small public and cooperative utility approach substantially reduces the impact of EPA's proposed Clean Power Plan on this sector, while still achieving significant carbon emissions reductions. The commenters stated that based upon its understanding of the small public and cooperative utility markets and economics, AEPCO believes that some of the other utilities in this sector would similarly benefit.

Commenters sta ted that AEPCO has only the patronage capital necessary to maintain financial stability is retained at the generation cooperative, and that any excess is required to be returned to the members. The commenters stated that AEPCO does not have the ability int ernally to raise capital. The commenters stated that AEPCO's net cash flows have been historically flat and frequently negative, and does not have the internal ability to finance the construction or purchase of new generation and pay down its existing deb t load. The commenters stated that it does not believe that it can afford to expand debt to the extent necessary to accommodate the proposed Clean Power Plan's expedited retirement of AEPCO/s affected EGUs and provide for alternative power generation for AEPCO's members.

Commenters stated that If AEPCO adopts the "compliance option," its capacity charges, expressed in a $/KWMonth basis, will increase by 69.9% in 2020 and 78.1% in 2030 compared to base. The commenters stated that if they build new units sub ject to the proposed NSPS to replace all its exiting affected EGUs and exit the 111(d) program entirely, its capacity charges, expressed in a $/KW

- Month basis, will increase by 62.9% in 2020 and 59.1% in 2030. The commenters stated that these are substanti al increases, particularly when borne by the relatively small number of members and their customers.127 Commenters stated that that Apache EGU Station is non

- viable with the added costs of Clean Power Plan upgrades. The commenters stated that unless changed, the capacity premium and energy charges resulting from compliance with the proposed rule may cause members to withdraw, leaving the Apache EGU Station as a stranded asset. The commenters stated that it is not clear that a purchased could be found for the assets.

Commenters cited a study showing that the emission rate trading disproportionally hurts small utilities and is devastating to non

- diversified coops and municipals. The commenters stated that the rule creates stranded costs from plant shut downs. Th e commenters stated that EPA has recently ordered the installation of selective catalytic reduction at Laramie River Station, which will cost $750 million, and that one of the three plants could be closed, causing stranded costs. The commenters stated that they have no load in Wyoming and could only comply by building unneeded renewable energy facilities. The commenters estimated that closing Laramie River Station and replacing it with natural gas combined cycle at a different location could cause a 65
perc ent increase in wholesale costs and a 35 percent increase in member retail rates.

Commenters stated that their preliminary analysis reveals that AECC's costs will increase primarily due to a shift in the fuel source used for AECC's power plants from coal to natural gas and that a typical residential member's bill will increase 10 percent to 30 percent compared to that same member's bill today, depending on the exact measures implemented.

Commenters stated that the proposed rule does not provide a reasonabl e timeline to comply and that has costs of compliance greater than any environmental benefit. The commenters stated that there was no consideration of our cooperative model, in which member owners bear all costs of generation and compliance.

Commenters st ated that EPA cannot afford to ignore municipally

- owned utilities and rural electric cooperatives and still hope to achieve the overall greenhouse gas emission reduction goals it has set. The commenters stated that distribution

- only cooperatives, as well a s municipal utilities that do not own or operate affected EGUs, will have no compliance obligations under the Clean Power Plan. The commenters stated that Generation & Transmission ("G&T") cooperatives serve a large majority of distribution cooperatives, a nd increase the effective size, diversity and geographic range over which grid optimizing decisions (e.g., dispatch changes, heat rate improvements, emission trading, renewable energy investments) can be made, and these larger markets give small rural coll ectives a greater opportunity to make the changes necessary to reduce greenhouse gas emissions. The commenters stated that Rural Utilities Service ("RUS"), a program operated by the U.S. Department of Agriculture, provides funding, loan guarantees, and ad ministrative support to rural electric cooperatives to enable them to construct distribution, transmission, and generation facilities and cooperatives can also obtain funding from the National Rural Utilities Cooperative Finance Corporation, which raises f unds from capital markets to supplement the loan programs offered by RUS. The commenters stated that the cost of capital for cooperatives is often lower than that available to investor

- owned utilities.

Commenters stated that electric cooperatives are able to take advantage of the long payback timeframes that come with renewable energy installations, because they have access to unique financing mechanisms for renewable energy development, including the Clean Renewable Energy Bond ("CREB"), which is available to electric co

- ops, and state and local government to128 finance qualifying renewable energy facilities. The commenters stated that the National Rural Utilities Cooperative Finance Corporation recently partnered with the Federated Rural Electric Insurance Ex change and the National Renewables Cooperative Organization to enable cooperatives to access tax equity financing for the development of community solar
programs. The commenters stated that cooperatives tend to be concentrated in rural, open areas of the Midwest and plains states down to northern Texas, which happen to be the areas of higher onshore wind potential in the United States, and that these cooperatives are able to take advantage of the lowest wind prices in the country.

Commenters stated that ru nning coal units less than 10 percent below their operational norm on a continuing basis may keep G&Ts from generating enough revenue to service the outstanding debt on the unit and that loan defaults will result in further cost impacts that threaten the a bility of G&T's to continue to effectively operate. The commenters stated that all costs are borne by rates and that increased rates will have a devastating impact on the communities served by the G&T Cooperative Fossil Group. The commenters stated that G &Ts will have the most difficult time shifting generation from coal to NGCC and RE and aggressively promoting EE to end users. The commenters stated that EPA's model presumes that the Tri

- State Generation and Transmission Association, Inc., (Tri

- State) coa l

- fired facility, Springerville Unit 379 in Arizona will dispatch at such a low level due to the CPP that its continuing operation will no longer be economically viable. The commenters stated that Tri

- State built the 417 MW Powder River Basin coal plant in 2006 and invested just under one billion dollars in it and the expected remaining useful life of the plant extends until 2066. The commenters other examples of premature retirements of EGUs operated by coops and resulting stranded costs, and financial imp acts.

Commenters stated that the reduction in rate revenue and the cost of filling the generation gap resulting from reduced coal generation will have a financial impact on EKPC's Owner

- Members. The commenters cited (1) unrealistic heat rate improvement go als laid out in the proposal; (2) the additional cost of environmental dispatch of coal and gas operation under Building Block 2 without regard to economics or reliability; (3) the cost of RE and the market gap between the installation cost and market valu e of RE capacity and energy; and (4) the cost of EE that EKPC's distribution member cooperatives will incur to try and meet savings targets from rural service territories as causes. Commenters stated that these costs will challenge G&Ts ability to service debt and that significant rate increases (up to 35%) that will result from the CPP will have a major impact on the rural communities served by EKPC. Commenters cited NERA projections that there will be an 18 percent increase in coal unit retirement (as com pared to 2014 retirement numbers) and using only Building Blocks 1 and 2, NERA estimates that there will be a 68 percent increase in coal unit retirements through 2031 (as compared to 2014), with the greatest impact on the central and southeast region.

Co mmenters stated that the proposed rule would result in the early retirement of SMEPA's coal fired generating facility, Plant Morrow as a result of decreased capacity factor and unobtainable RE and EE targets. The commenters estimated the present estimated value adverse impact on SMEPA is $366.5 Million, due to higher cost of replacement energy for reduced Plum Point output., reduction in Plum Point Capacity revenues due to an effective 81 MW reduction in capacity, plant Morrow higher amortization cost (stra nded asset due to closing) and loss of Plant Morrow capacity revenues. The commenters stated that there would likely be other transmission129 investments necessary to accomplish removing Plant morrow as an energy source to SMEPA's transmission system. The co mmenters stated that that the effect on its financial position flowing from implementation of the Clean Power Plan will materially weaken its credit standing. The commenters stated that SMEPA currently plans to invest up to $650 Million for 15% ownership

o f the Kemper IGCC Project which will be the cleanest coal plant in the country, but in the EPA Clean Power Plan, SMEPA does not receive any credit whatsoever for these investments. The commenters stated that the investments simply lower the CO2 baseline re ference point and thereby increase the difficulty in meeting reduction targets in 2020 and 2030, thus EPA's evaluation criteria effectively penalize the Association for making these investments that have substantial environmental benefits.

Commenters reque sted that EPA work with cooperatives to develop G and T mitigation
measures to ease the significant financial burdens associated with stranded assets and replacement power and transmission requirements. The commenters suggested federal debt forgiveness eli mination of prepayment penalties and other financing needs as possible areas for discussion.

Response 30: EPA disagrees with these comments. As discussed in sections V.A.4 and V.A.5 of the final rule preamble, all types of owners of affected EGUs have a ccess to means for complying with emissions limits reflective of the BSER. Our approach to subcategorization under this rule appropriately follows our traditional approach and considers relevant physical and operational differences among affected EGUs, as discussed in section V.A.2. Further, as we note in those discussions of subcategorization and elsewhere in the preamble, a state has the flexibility in developing its state plan to establish emission limits that vary among the state’s EGUs in order to ac count for differences in those EGUs’ circumstances, which at the state’s option could include differences in ownership.

Comment 31: Commenters stated that if individual states choose to go beyond EGUs to achieve emissions reductions under the proposal, sm all businesses, particularly industrial and manufacturing facilities, could be faced with the expenses associated with reducing emissions from their facilities.

Response 31: The EPA is establishing final emission guidelines for states to follow in developing plans to reduce CO 2 emissions from existing fossil fuel

- fired electric generating units. The CPP does not require that states go beyond EGUs to achieve emission reductions as the commenters suggested

. These emissions reductions are achievable by the affected sources, as discussed in section V of the final rule preamble.

Comment 32: Commenters stated that EPA should not compel the creation of multi

- state collaborations, bu t should allow states to voluntarily provide for cooperative agreements for CPP compliance if they determine it is mutually agreeable and EPA determines that equivalent environmental performance is delivered. The commenters stated that EPA should not estab lish130 CPP targets that are not economic or feasible within each state or based on an assumption of state collaborations.

Commenters stated that many Missouri electric utilities own electric generating units that are not located in Missouri and that this wil l be a factor in regional carbon emissions. The commenters stated that in a multi

- state plans individual state performance goals would be replaced with an equivalent multi

- state performance goal which require clarification in the final rules.

Response 32: The final rule does not compel creation of multi

- state collaborations. See section VIII of the final rule preamble. Furthermore, the final rule does not require individual state performance goals.

Comment 33: Commenters stated that preliminary MISO regi onal modeling results show that the model did not choose energy efficiency (even assuming U.S. EPA's EE costs which are lower than Indiana's actual EE costs) when the model was allowed to optimize CO2 reduction options at the least cost. The commenters sta ted that energy efficiency does not appear to be part of the least cost solution to meet CO2 goals for Indiana.

Response 33: The EPA has determined not to include demand

- side energy efficiency (building block four) in the BSER of this final rule and theref ore we do not need to address further comments supporting the removal of DS

- EE from BSER. This determination is discussed in section V.A of the final rule preamble of the CPP. Even though demand

- side energy efficiency is not being included in the BSER in t his final rule and, thus, not included in the determination of emission performance rates, the final rule provides states the flexibility to use demand

- side energy efficiency measures in their state plans for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the applicable requirements established in section VIII (State Plans) of the preamble for the CPP. Accordingly, the EPA is including a level of DS

- EE as a component of our illustrative plan scenarios that are the basis for the analysis discussed in Chapter 3 of the RIA that supports the final CPP. EPA is reducing the level of DS

- EE in the illustrative demand

- side energy efficiency plan scenario relative to the level represented in the proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. The EPA generally believes that DS

- EE at these levels are cost

- effective and part of a least cost strategy for states. Based upon more up

- to

- date and extensive data, the EPA is slightly modifyin g our approach to DS

- EE costs from that used for the proposed CPP. The support for the DS

- EE costs supporting the final CPP is provided in the Demand

- Side Energy Efficiency TSD and is the basis for DS

- EE costs represented in the RIA for the final CPP. The EPA continues to believe EE will play a substantial and cost

- effective role in state strategies, and that the levels represented in the DS

- EE plan scenario are low cost. Because EPA’s modeling platform for the power system does not allow for the endogenous representation of DS

- EE, the RIA cost estimates may slightly overestimate compliance costs by not allowing for the use of non

- EE strategies in instances where they may be lower cost. The EPA disagrees the DS

- EE will not substantially contribute to a least cost solution or that the RIA’s estimates of compliance costs are not reasonable.131 Comment 34: Commenters stated that the EPA has not demonstrated that imposition of Building Block 2 by 2020 nationwide can be accomplished at a reasonable cost, because the agency has not modeled the impact of full compliance with Building Block 2. Commenters further stated that EPA's modeling predicts much smaller changes in the generation mix, and therefore presumably in the costs, resulting from Building Block 1 and Build ing Block 2, than a straightforward application of Building Block 2 alone to the 2012 baseline. Commenters believed that this discrepancy may arise in part because the 'Baseline Case' for EPA's modeling apparently predicts that dramatic shifts in the natio nal generation mix will occur by 2020 in the absence of the CPP.

Response 34 : In the final rule, the timing of building block 2 is revised to start in 2022 and gradually phase in over the interim period. Additionally, EPA considered the cost

- effectiveness of building block 2. For more information, see final rule preamble section V.D and the GHG Mitigation Measures TSD.

Comment 35: Commenters stated that the current infrastructure will not support the need to re

dispatch coal

- fired units to NGCC. Commenters stated that it does not have the financial resources to replace its coal capacity with new NGCC. Commenters further stated that in addition to the higher fuel cost of NGCC, the added capital cost would place a severe burden on smaller entities.

Response 35: EPA disagrees with this comment. See final rule preamble section V.D. and GHG Mitigation Measures TSD.

Comment 36: Commenters stated that the recent demand for new natural gas pipeline capacity is driving costs even higher. Commenters further stated that because of the limited number of companies that install new natural ga s pipelines, the cost and time for installation is escalating as demand continues to grow.

Commenters stated that Pace Study reviewed the new construction requirements necessary to meet service and reserve requirements and concluded that Arizona will need to install approximately $1.9 billion in additional natural gas generation capacity. Commenters stated that

m ore than $3 billion of utility investments would be stranded in 2020 due to premature retirement of coal

- fired power plants.

Commenters stated that the northern leg of El Paso Natural Gas pipeline is likely to become highly constrained by 2020 and in need of expansion. Commenters further stated that at a minimum, the 330 mile length of El Paso in Northern Arizona, which varies between a 30 and 36 inc h diameter and averages approximately 2.5 Bcf/d in throughput capacity, would need to be expanded by 500 MMcf/d no later than 2023 at a likely maximum cost of $335 million. If a 12 inch or smaller diameter pipeline can be used (which has a median $45k/mile cost, according to the same Oil and Gas Journal study), then at a minimum the additional infrastructure cost would be $97 million. Commenters further stated that the range for a gas pipeline infrastructure upgrade132 on the most affected portion of pipeline (El Paso Arizona North) is between $97 and $335 million dollars. Commenters further stated that this estimate is illustrative of one expansion required for major a major pipeline and not exhaustive of all other upgrades that would be required for both majo r pipelines and smaller distribution systems.

Response 36: EPA does not agree that the rule will cause significant additional requirements for natural gas pipeline construction. This comment only relates to current capacity requirements in a single locati on. While EPA agrees that these types of limitations can occur without the rule, the rule provides multiple alternatives for compliance and does leads only to small overall increases in pipeline capacity. See the RIA Chapter 3.

Com ment 37: Commenters st ated that the debt and its associated investment is largely associated with major coal

- based facilities, and represents substantial investment

- backed expectations in private property, none of which was constructed or financed with the expectation that EPA or any other governmental authority would order the early curtailment or retirement of these assets. Commenters stated that there are many additional costs associated with forced retirement or premature closure of coal

- based facilities. Commenters further stated that when plants are forced to close before there expected life, numerous collateral consequences follow, including breaches of existing contracts for coal supplies, power purchase agreements, etc.

Response 37: See section 5.11 of this response to c omments document for EPA’s response to the stranded asset comments

.

Comment 38: Commenters stated that under the proposed Clean Power Plan the states will have different implementation plans to meet vastly different targets for emission rate limits even f or states within the same RTO/ISO footprint, and the steps in these plans will likely include measures beyond emissions control equipment, it is incumbent on both federal and state regulators as well as wholesale market operators (RTO/ISO's) to work on way s to implement greenhouse gas reductions without undermining the economic dispatch function and reliability of competitive wholesale electricity markets. Commenters further stated that coordination must occur between RTO/ISO states and other regions of the country not in a RTO/ISO footprint. Commenters stated that the final rule should include options that allow states to preserve the current price

- dispatch model while reflecting the cost of complying with the environmental regulations within that model. Co mmenters stated that the in other words, EPA should look for ways to facilitate price

- based compliance using existing well

- developed structures.

Response 38: The proposed rule was designed to be consistent with environmental dispatch and the final rule makes it clear that trading is an important tool available for compliance with the rule. See the state plan sections of the final rule preamble for ways that states can coordinate to facilitate implementation of the rule across state and regional boundar ies ( section VIII.)133 Comment 39: Commenters stated that the proposed rule is a method of taxation without representation.

Response 39: EPA disagrees with this comment.

Comment 40: Commenters stated that the Erickson Station houses a single coal

- fired 159 MW Electric Generating Unit (ORIS 1832). Commenters stated that the plant began operation in 1973 and is a critical asset for the BWL's plan for power production in the future. Commenters stated that the Erickson is critical to the BWL's ability to mainta in electric reliability in the Lansing area. Commenters stated that the Proposed Rule threatens the continued existence of Erickson Station and such a loss would cripple the BWL. Commenters stated that the process of deciding whether to build new generatio n may well lead to the conclusion that it is too costly to maintain any meaningful role in the power generation business. Commenters stated that the principal options available to BWL to replace its generating capacity are (i) new natural gas

- fired generat ion, (ii) additional renewable generating capacity, and (iii) abandoning the business of generating power altogether.

Commenters stated that Minnesota and the MISO region rely on a diverse portfolio of resources to provide different services to the grid. C ommenters stated that this building block upends the diverse portfolio that has been built over the past few decades, exposing everyone in the market to greater financial and reliability risks.

Response 40: See final rule preamble section V. The EPA projec ts that the national generation mix will continue to be diverse under the final rule. See RIA Chapter 3 for EPA’s projections of generation mix under two illustrative compliance scenarios.

Comment 41: Commenters stated that the EPA should revise its cost

- benefit analysis to incorporate the direct costs required for rule compliance and to re

- calculate its benefits analysis by revising the current global scope of estimated benefits to a state or regional scope that more closely matches the geographical scop e of the estimation of direct costs. Commenters stated that the EPA's cost

- benefit analysis is flawed, both because it fails to incorporate the direct costs required to comply with a carbon

- emissions reduction of the size the proposed regulation contemplat es and because it overstates the value of avoiding those carbon emissions. Commenters stated that even while understating the direct costs associated with the rule, EPA has overstated the degree to which benefits will obtain from the rule. Commenters state d that carbon

- dioxide emissions may have a cost associated with them, although there remains disagreement on this point. Commenters stated that the EPA's Regulatory Impact Analysis (RIA), through its incorporation by reference to the Social Cost of Carbon technical support document, measures benefits inasmuch as they avoid "the worldwide damages caused by carbon dioxide emissions in order to reflect the global nature of the problem."

Response 41: EPA disagrees with this comment. The RIA appropriately captu res and reports the incremental costs projected to be incurred by the power sector as a result of two illustrative134 compliance approaches analyzed. Regarding the scope of benefits estimated in the RIA, see Response to Comments s ection 8.7.2, comment 3, and section 8.7.2, comment 1.

Comment 42: Commenters stated that the EPA offers no analysis as to the combined costs and feasibility of all of these programs on the power generation industry. Commenters stated that the EPA even attempts to place the onerous task of coordinating EPA regulations, compliance options and timing requirements on states that will regulate these entities stating states will have ample opportunity to design Section 111(d) plans that coordinate with these other regulations "...and to d o so in a manner that will help reduce cost and ensure reliability, while also ensuring that all applicable environmental requirements are met." Commenters stated that the state air quality agencies have never been given the authority or responsibility, no r do they have the knowledge, to ensure reliability of the power system.

Response 42: EPA disagrees. EPA does not expect state air quality offices to be the guarantors of reliability and fully recognizes that responsibility for reliability lies with the designated authorities. That is why states are required in the final rule to coordinate with reliability entities in plans, and provided states with flexibility so that there reliability conflicts will be highly unlikely. In the event of unlikely unantic ipated events trigger emergency conflict between compliance with the rule and reliability, the rule also provides a reliability safety valve mechanism (See Preamble Section VIII.G.2.)

Comment 43: Commenters stated that the engineering economic analyses th at provided the initial evidence for the efficiency gap showed that saving energy was significantly less costly than consuming it. Commenters stated that ex ante analyses indicated that there would be substantial net benefits from including technologies to reduce energy consumption in consumer durables. Commenters stated that as these policies to spur investment in and deployment of energy savings technologies were implemented, ex post analyses were conducted to ascertain whether the ex ante expectations we re borne out.

Response 43: Thank you for your comment.

Comment 44: Commenters stated that because efficiency plays such a large part in carbon reduction in the policy case, the cost of efficiency makes up the bulk of the cost of the policy. Commenters sta ted that the EPA includes not only the resource cost of efficiency, but also the program costs of implementing policies to achieve the higher levels of efficiency. Commenters stated that the EPA assumes that program costs are equal to resource costs. Comme nters stated that the estimate of the current cost of efficiency with program costs is $55/MWH. Commenters stated that the EPA then assumes a substantial increase in the cost of efficiency, which ends at almost $89/MWH. Commenters stated that there is no e vidence to support the assumption that the cost of saved energy will rise in real terms. Commenters stated that the likelihood that the cost of saved energy will not rise is reinforced by the fact that much of the increase in saved energy will come from st ates that have not had vigorous programs to tap this resources.135 Commenters stated that at least for the period that the EPA rule covers, efficiency gains still involve a lot of low hanging fruit. Commenters stated that the experience in the electricity sec tor should also lower the startup costs, of utility programs as effective models have been worked out over decades in the leading states. Commenters stated that the States that worry about the cost of implementation can copy the successful programs.

Respon se 44: The EPA has determined not to include demand

- side energy efficiency (building block four) in the BSER of this final rule and therefore we do not need to address further comments supporting the removal of DS

- EE from BSER. This determination is discus sed in section V.A of the final rule preamble of the CPP. Even though demand

- side energy efficiency is not being included in the BSER in this final rule and, thus, not included in the determination of emission performance rates, the final rule provides sta tes the flexibility to use demand

- side energy efficiency measures in their state plans for compliance to meet the emission guidelines set forth in the final CPP, provided they meet the applicable requirements established in section VIII (State Plans) of th e final rule preamble for the CPP. Accordingly, the EPA is including a level of DS

- EE as a component of our illustrative plan scenarios that are the basis for the analysis discussed in Chapter 3 of the RIA that supports the final CPP. EPA is reducing the l evel of DS

EE in the illustrative demand

- side energy efficiency plan scenario relative to the level represented in the proposed CPP, from 1.5% annual incremental savings down to 1.0% annual incremental savings. The EPA generally believes that DS

- EE at thes e levels are cost

- effective and part of a least cost strategy for states. Based upon more up

- to

- date and extensive data, the EPA is slightly modifying our approach to DS

- EE costs from that used for the proposed CPP. The EPA agrees with the commenters that EE costs are likely to decline at higher savings levels, at least up to the 1.0% target used for the illustrative plan scenarios and the revised cost estimates reflect this change. The support for the DS

- EE costs supporting the final CPP is provided in the Demand

- Side Energy Efficiency TSD and is the basis for DS

- EE costs represented in the RIA for the final CPP.

Comment 45: Commenters stated that the CPP evaluation does not take into consideration the cost suppression effect of the federal Production Tax Credit and the Investment Tax Credit, which expire at the end of 2013 and 2014, respectively. Commenters stated that as RPS requirements continue to grow over time, it is possible that RE may be difficult or infeasible to procure due to the technical or ec onomic availability of RE resources. Commenters stated that most states address these potential constraints through RPS policies containing force majeure and annual compliance payment provisions that address resource availability, as well as cost cap provi sions that address unusual pressure for cost increases to ratepayers.

Response 45: EPA disagrees with this comment. EPA’s evaluation of the impacts of the rule does, in fact, consider the expiration of the PTC. Furthermore, EPA expects the level of

renew able generation quantified as BSER to be achievable. For more information, see section V.E. of the preamble and the GHG Mitigation Measures TSD.136 Comment 46: Commenters stated that the Base Plan reflects some level of future CO2 emissions limits, the indi cative cost analysis considers the Base Plan as a reference point for estimating the incremental costs of meeting the proposed emissions limits for Virginia. Commenters stated that the Base Plan, it should be noted, is itself expected to produce significan t reductions in the expected CO2 emissions rates for Dominion's EGUs. Commenters stated that the expected average Base Plan emissions rate reflects a 28% reduction compared to the 2012 baseline emissions rate used in the EPA's development of Virginia's Man datory Goals. Commenters stated that the emissions rate resulting from the Base Plan would effectively meet the carbon emission rates that EPA proposes for 24 other states. Commenters stated that despite this significant reduction and the significant net p resent value incremental cost of the Base Plan, this plan would fall well short of meeting the Mandatory Goals assigned to Virginia.

Response 46: See preamble section VII for a discussion of the finalized emission rate performance goals.

Comment 47: Comme nters stated that the projected costs for the IEP may range from $16 to $25/MMBtu and may be one

- third more expensive than coal. Commenters stated that whether natural gas comes to the FNSB from the North Slope or Cook Inlet may merit further review (as ad vocates debate the issue, particularly as it pertains to cost differences). Commenters stated that if the IEP is delayed, there is a real probability that buying potential "stop

- gap" natural gas powered electricity from South

- central may cost more than coa l

- fired electrical generation in the Interior. Commenters stated that this probability, aligned with previous sunk

- costs for GVEA, may create a potential adverse economic effect to Interior ratepayers.

Response 47: This comment indicates the issues cited a pply to Alaska; however Alaska is not included in the final rule

.

Comme nt 48: Commenters stated that the EPA analysis of the likely cost of the proposed rule is flawed, in that it over

- estimates the availability of cheap, available coal, and under

- estimates the cost of delivered coal to utilities. Commenters stated that the costs of alternative, clean energy solutions like energy efficiency, wind and solar energy are weighed against an overly optimistic assessment of electricity generated by c oal

- fired power plants. Commenters asserted the evidence is clear that the delivered cost of coal in Nebraska and other states will continue to rise more rapidly than inflation, and it appears the models the EPA is relying on over

- state likely available co al resources and under

- state their likely costs.

Response 48: EPA disagrees with this comment. EPA’s analysis of both the proposed and final rule is informed by the Integrated Planning Model (IPM), developed by ICF Consulting, which is
a state

- of

- the

- art, peer

- reviewed, dynamic linear programming model. The model incorporates a detailed representation of the fossil

- fuel supply system that is used to forecast equilibrium fuel prices. The model includes an endogenous representation of the North American nat ural gas supply system through a natural gas module that reflects a partial supply/demand equilibrium of the North American gas market accounting for varying levels of potential power sector gas137 demand and corresponding gas production and price levels. Th is module consists of 118 supply, demand, and storage nodes and 15 liquefied natural gas re

- gasification facility locations that are tied together by a series of linkages (i.e., pipelines) that represent the North American natural gas transmission and dist ribution network.

IPM also endogenously models the partial equilibrium of coal supply and EGU coal demand levels throughout the continental U.S., taking into account assumed non

- power sector demand and imports/exports. IPM reflects 36 coal supply regions, 14 coal grades, and the coal transport network, which consists of over four thousand linkages representing rail, barge, and truck and conveyer linkages. The coal supply curves in IPM, which are publicly available, were developed during a thorough bottom

- up , mine

- by

- mine approach that depicts the coal choices and associated supply costs that power plants would face if selecting that coal over the modeling time horizon. The IPM documentation outlines the methods and data used to quantify the economically reco verable coal reserves, characterize their cost, and build the 36 coal regions curves. The coal supply curves were developed in consultation with Wood Mackenzie, one of the leading energy consulting firms and specialists in coal supply. These curves have be en independently reviewed by industry experts and have been made available for public review prior to this rulemaking process. For more information, see the IPM Documentation, available in the docket and also at: http://www.epa.gov/airmarkets/powersectorm odeling.html

.

Comment 49: Commenters expressed grave concern that, e ven though EPA has claimed to create an ESPS with great flexibility and with different emphasis for each state for the four BBs, the EPA has actually created de

- facto "one size fits al l" guidelines for the states that go far beyond traditional source

- specific standards. The commenters stated that the statute dictates that Section 111(d) emissions standards be designed to be cost

- effective and achievable at each specific source or electr ic generating unit (EGU) and not based on statewide emission limiting goals. The commenters argued that each state's electric generating system is unique and this rule does not adequately address those differences.

The commenters stated that if EPA persis ts in pursuing a regulatory framework that is outside the constraints of the CAA, it is critical that EPA's ESPS rule take into consideration each state's unique energy and economic situation as well as the technological feasibility and most importantly, t he cost of EPA's compliance building blocks for each state. The commenters stated that the EPA has failed to do this by modeling the costs on a national basis and renewable energy and energy efficiency on a regional basis. The commenters argued that each s tate should have a far greater role in the design of the standards than has been afforded by EPA, particularly since EPA has designed standards for many states that are simply unachievable in the allotted time frame. Further, the commenters argued that the EPA needs to allow states the flexibility to adjust emission limiting standards, implementation dates and to exempt certain facilities on a case by case basis as provided by the statute.

Response 49: EPA disagrees with this comment. See final rule preamb le section V. Regarding the impact analysis of the final rule, see Chapter 3 of the RIA. This analysis of two illustrative compliance scenarios in the final rule is based on detailed bottom

- up modeling assumptions. See Chapter 4 of the IPM documentation for a summary of the regional cost and performance138 assumptions for renewable generation. See Demand

- Side Energy Efficiency Technical Support Document for more information on demand

- side energy efficiency.

Comment 50: Commenters expressed concerns about the establishment of a minimum floor for NGCC, which would create market distortions and prevent a utility from providing the least

- cost resources to its consumers, especially during times of natural gas price volatility. The commenters stated that market distortions would increase prices in states such as Kentucky. The commenters further suggested that an NGCC floor could affect reliability in areas that have not historically relied on NGCC and would require a significant build out of electricity generatio n and transmission, as well as the natural gas infrastructure necessary to serve those generators. The commenters indicated that the planning horizon for such investments is long, and it is not clear that the assets would be in place by 2020 or even 2030 i n some cases.
The commenters then discussed the use of a regional approach to set the NGCC floor as indicated in the NODA and stated that it limits a state's flexibility. The commenters further stated that the regions identified do not match dispatch or market regions, creating seams, which introduce inefficiencies and that the NODA does not consider the transmission needs necessary to move power across the region, which introduces reliability, timing, and siting concerns and higher costs of electricity.

The commenters then stated that "changes to the goal

- setting equation not only introduce uncertainty but also do not reflect the realities of the electricity system. Fossil fuel

- fired baseload units cannot be replaced with intermittent RE generation and EE. The backup ge neration needed would likely be natural gas, which would diminish CO2 reductions and lead to more investment for natural gas capacity and therefore higher electricity prices

. "

Response 50: EPA disagrees with this comment. The final rule does not establish a minimum utilization floor for NGCC. Additionally, see section V of the final rule preamble for discussion of the building block phase

- in, regional approach, and backup generation for new renewables.

Comment 51: Cost effectiveness models inform selecti on of choices.

Commenters urged the EPA and state governments to consult IEER's "Climate Protection Scenario" in Section V.C of the IEER Comments. Commenters said that IEER presents individual models for carbon reductions for every state (except VT, AK, HI and the District of Columbia), and these models demonstrate that states can achieve greater carbon reductions than the targets proposed by the EPA, relying primarily on efficiency and renewable energy. Commenters stated that this can be done at costs of c arbon reduction per metric ton of CO2 equivalent that are generally lower than those in the Clean Power Plan. Despite 2030 emission reductions being over 2

- 1/2 times greater (relative to 2012), commenters said that the IEER Climate Protection Plan would co st only about $3.3 billion more in 2030, or about $9 per person. Benefits, in terms of reduced health costs and lower damages in other areas would increase by tens of billions of dollars commenters concluded.139 Response 51: As discussed in section IV of the preamble, the requirements of this rule are consistent with section 111 of the Clean Air Act.

Comment 52: Commenters discussed limitations with the IPM model used by EPA in the regulatory impact analysis.

Commenters discussed the IPM model used in the reg ulatory impact analysis in detail and provided the following limitations, biases and recommendations based on the commenters analysis of the model and its outcomes:

• Detailed dispatch becomes increasingly important as renewable energy deployment increases, which typically occurs in later decades of the time horizon, making the use of maintain eight representative annual segments for later model years problematic.

• The resource adequacy and reliability analysis TSD does not sufficiently demonstrate potential operational challenges associated with the capacity mixes resulting from the proposed rules because IPM does not represent unit commitment and dispatch in a detailed manner.

• Energy efficiency is not modeled as a resource and the method of forcing in
energ y efficiency exogenously leads to a bias in cost estimates.

The commenters provided several reasons that the model may lead to bias. The commenters recommended that EPA examine its model to take into account the cost and quantity assumptions based upon re cent historical experience, estimate end

- use capital stocks by state, explicitly assess the available resource based upon those estimates, and forecast of how technological improvements into the future could increase that resource. In addition, the comment ers recommended that energy efficiency be modeled as a technology option that competes against other technologies to meet load, both in the Clean Power Plan scenarios and the reference scenario, and suggested a methodology to serve as a guide to how this c an be done in a capacity investment model.

Commenters discussed IPM model used by EPA and stated that EPA has concluded that Rule 111(d) will not affect resource adequacy because the IPM model does not let it affect resource adequacy. The commenters furthe r stated that this assumption is not supportable, does not reflect how electricity markets actually operate, and that the proposed rule will have a very real and significant effect on reliability.

Commenters stated that costs in regions with RTO markets will increase due to the proposed rule. The commenters stated that RTO markets are far from perfectly competitive markets and that prices and actual costs often diverge and at times, such as during periods of constrained supply. The commenters provided an example and cited the Market Monitor for PJM that found that the "behavior of some participants during the high demand periods raises concerns about economic withholding". The commenters also stated concerns about market power, citing a $77140 million auction price increase resulting from the retirement of a coal fired plant and reduced capacity concerns, and about costs of implementing the Proposal within the RTO markets which may be exacerbated by frequent changes in market rules, often to the advantage of t he merchant generators. The commenters also stated that "Merchant generation owners have a financial interest in constraining the supply of resources as a means to keep prices high. For example, the tightening of Minimum Offer Price Rules (MOPR) and the re moval of the state and self

- supply exemptions in the PJM region, were a direct result of a generator complaint in response to state

initiated efforts to procure new, more efficient natural gas fired units. It is likely that as new, low

or non

- CO2 emitting resources attempt to enter the markets, there is a potential for additional rule changes to impede such entry."

The commenters also cited the Navigant Paper that noted a result of significant reductions in CO2 is likely to be that "the effects of energy ef ficiency improvements on capacity prices will likely be substantial, depressing prices for many years, and calls for further changes to capacity markets to reduce this effect might be expected." The commenters stated that "To the extent that merchant gener ators are able to erect additional barriers to new construction of natural gas generation, renewable resources, and energy efficiency, so too will the capacity and energy market costs increase beyond what was modeled by the IPM."

Commenters noted several c oncerns with EPA's use of IPM to determine achievable carbon reductions.

Commenters stated that the IPM cannot correctly determine the achievable carbon reductions through its use by EPA as a substitute model for re

- dispatch. The commenters noted that disp atch models are non

- linear and require tremendous amounts of actual historical operating data to solve for multiple variables in order to determine optimal dispatch. The commenters stated that any attempt by the EPA to re

- dispatch individual states through the use of the IPM using national data will inherently create reliability issues for the electric grid. The commenters itemized some of the model's limitations as follows: "(1) IPM only dispatches on a seasonal basis: summer (May 1

- September 30) and winte r (October 1

- April 30), (2) IPM does not include the detailed intraregional transmission and distribution necessary to evaluate the effects of the Clean Power Plan at numerous local levels, (3) IPM has an algorithm which aggregates plants; it does not trea t each plant as a separate geographical entity. Transmission and distribution congestion happen at the local geographic level. For grid reliability analysis, generation and natural gas infrastructure geographical location is paramount, (4) IPM has a natura l gas module that is primarily designed to estimate the demand and supply of natural gas. IPM also has the same seasonality as the dispatch seasonality noted in Item No. 1 above as well as an interregional gas transmission network. However, it does not cap ture the complexity of intraregional transportation constraints."

The commenters noted that the structure of the IPM means that renewable resources cannot be adequately modeled because to adequately simulate the effect of wind and solar generation on the grid, a dispatch model must contain random weather inputs so that the intermittence of renewable resources can affect the model and to simulate renewable resources' intermittent effect on the grid, the dispatch model must dispatch on an hourly basis. The c ommenters stated that modeling multiple years of random weather on an hourly dispatch model can indicate where transmission constraints might occur within the grid and noted that the IPM cannot do any of141 these tasks and as such cannot estimate the cost of retaining grid reliability. The commenters added that because the IPM does not have a detailed, local map of the grid or a detailed local map of natural gas infrastructure, it cannot estimate the cost of shutting down an existing coal plant or the cost and reliability impact on the grid of simply significantly reducing the use of a coal plant. The commenters concluded that because EPA relied on flawed IPM as its simulation tool, it cannot demonstrate the reliability of the grid or reasonably forecast the co st of its Clean Power Plan.

Commenters stated that the IPM purports to account for inter

- zonal transmission constraints but does not account for transmission limitations that may exist between an EGU and load centers within states. The commenters noted th at the massive and abrupt shift of generation from coal

fired plants to NGCC plants or simple cycle combustion turbines (CTs) firming additional renewable resources within the state will require significant changes in transmission infrastructure as well as changes in how the grid is operated. The commenters also noted that EPA did not indicate what inter

- area transfers there might be during the evening hours, when renewable output subsides. The commenters further stated that the model does not realistically represent economic dispatch, as the IPM output files show that at least one unit at SGS would be mothballed for a number of years, and that several of the units would operate at 30 percent capacity factor, which appears to represent operation as a peaking unit. The commenters found this conclusion to be unrealistic.

Commenters did not agree with EPA's assessment of "retired" units in its IPM. The commenters noted that units that show "retired" are assumed by EPA to be retired prior to 2020 in order to
comp ly with the EPA rule or other applicable EPA regulations. The commenters noted that they have no plans to retire several of their coal or steam gas units by 2020.

Response 52: The EPA disagrees with this comment. The analysis detailed in the RIA is a

rea sonable estimate of the impacts of two illustrative compliance scenarios modeled. The demand

- side energy efficiency plan scenario in the RIA represents a reasonable assumption about the level of demand

- side energy efficiency investments that may be encour aged in response to the final CPP. See RIA Chapter 3.

Regarding planned retirements in EPA modeling, the inventory of generating capacity was updated, based on the most up

- to

- date information and/or public comments received by EPA, include unit

- level spec ifications (e.g., pollution control configurations), planned new power plant construction and closures. See RIA Chapter 3 and the IPM Documentation.

Comment 53: Commenters said that, the EPA has failed to demonstrate that the BSER is not "exorbitantly costly," but rather sets standards of performance based on a "crystal ball inquiry." (79 Fed. Reg. at 34,850). Commenters said that, EPA underestimates various costs and fails to account for other costs that are intimately related to implementation of the four blocks.

Commenters said that, EPA underestimates the actual cost of compliance with these regulations and their impact on energy markets (Energy Ventures Analy sis, Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector, 4 (Nov. 2014) ("EVA Study")).142 Commenters said that, under BSER Building Block One, the EPA proposes coal

- fired power plants improve their heat rate by 6 percent

- irrespec tive of previous heat rate improvements or current levels. (79 Fed. Reg. at 34,926). Commenters said that, BSER Building Block One is flawed because it does not consider the major factors which cause some plants to be more efficient than others. Commenters said that, certain coal

- fired power plants may expend exorbitant amounts in attempting to improve heat rates, which may be unattainable. Commenters said that, these energy costs would likely be passed onto consumers through more expensive goods and higher utility bills. Commenters said that, EPA's proposal to reduce the operating levels of coal

- fired power plants "would reduce any proposed heat rate efficiencies," and actually produce more carbon dioxide. Commenters said that, this is unreasonable, illogic al, and inefficient. Commenters said that, the EPA fails "to take into account the time required to pre

engineer, permit, engineer, procure and construct gas generation and transmission." Commenters said that, the EPA provides certain timeframes for states to draft a plan and reach interim and final emissions goals; however, it is unclear if the EPA factored in other cumbersome administrative hurdles that are already in place at both the state and federal levels. Commenters said that, these related regulato ry requirements will also cost coal

- fired power plants money and impact the electricity market.

Response 53: With respect to building block 1, the EPA responds to this comment in section V.C of the final rule preamble of the CPP and Chapter 2 of the GHG Mi tigation Measures TSD supporting the final CPP. EPA disagrees with the commenters’ assertions that EPA did not consider the cost of heat rate improvements in estimating the cost of the emission guidelines, potential changes in electricity prices, and costs to consumers. See section V of the preamble for the final rule for an analysis of the costs associated with BSER and the building blocks of the final CPP. The EPA analyzes the benefits and costs of illustrative compliance scenarios in the RIA. Time requ ired for engineering, permitting, procurement, and infrastructure and associated costs are considered in development of the illustrative compliance scenarios in the RIA. The EPA uses the Integrated Planning Model version 5.15 to model expected heat rate i mprovements and other actions for the compliance scenarios and this analysis is described in chapter 3 of the RIA. Potential impacts for secondary markets such as industrial consumers are discussed in chapter 5 of the RIA. On average nationwide, EPA estim ates that electricity prices will not change or increase less than 1 percent by 2030 from levels that would occur absent the CPP. Estimates for different regions of the country and for industrial consumers that negotiate electricity rates may differ from these nationwide averages. Natural gas prices are estimated to range from a decrease of about 2 percent to an increase of 2.5 percent in 2030 depending on the illustrative control scenario evaluated. Impacts to particular industrial consumers will depend upon a variety of factors that are discussed in chapter 5 of the RIA. The price change estimates are based upon the illustrative control scenarios evaluated by EPA. States will develop implementation plans that may differ from those projected by EPA and st ates will have the flexibility to consider circumstances relevant for their particular areas of the country in the development of those implementation plans

.143 8.6 ECONOMIC AND EMP LOYMENT IMPACTS

This section has been structured such that comments are place d in multiple general question/summary categories. For example if a comment addresses modeling issues and jobs analysis, it would be addressed in both comment 1 and comment 5 below. This approach allows for the comments to be fully discussed and addressed within each comment summary section.

Comment 1 : Comments asserted that the energy markets

, including gas, coal, and electricity

, are incorrectly modeled

, and commenters expressed concerns regarding the EPA's IPM modeling.

1.a. Commenters asserted that EPA modeling does not adequately reflect source

- specific or regional considerations.

Commenters stated that they were concerned that Nebraska's public power districts may be unduly affected by EPA's proposed Clean Power Plan. Comm enters said that Nebraska is the only state who, by statute, meets all of its power needs through a public power system. Commenters said all power in Nebraska is delivered by entities governed by independently elected boards. Commenters said this system co ntinues to be extremely effective in meeting the needs of Nebraska citizens by delivering reliable, low

- cost electricity. Commenters said that as it stands, the Nebraska public power districts may need to reduce capacity and reliance on existing units in o rder to comply with this proposal.

Commenters stated that in the last 10 years, Nebraska's population has grown only by 0.7 percent. Commenters said that since 2000, 69 of our 93 counties have experienced a decline in population, while our urban areas hav e experienced the added challenge of serving an increasing population. Commenters said both create unique population dynamics that the power districts must be ready to serve and sustain. Commenters said the proposed Clean Power Plan, in concert with other already enacted regulatory issues facing Nebraska utilities such as the Mercury and Air Toxics Rule, the Cross State Air Pollution Rule; and the Sulfur Dioxide standard/consent decree, has the potential to disproportionately impact Nebraska's public power system. Commenters said the Nebraska public power sector is being required to implement many costly compliance measures over such a short period of time.

Commenters stated that EPA has not thoroughly analyzed anticipated cost impacts on a case

- by

case bas is, and that the expected benefits to Mississippi of the proposed rule are justified by the magnitude of the expected costs that Mississippi ratepayers will bear under the Clean Power Plan. The commenters stated that the proposed rule would impose a dispro portionate burden on Mississippi by effectively mandating elimination of low

- cost coal generation, and the impacts will also have a magnified effect on the state GDP. The commenters stated that the Clean Power Plan would effectively require elimination of coal generation in Mississippi, causing a radical shift in resource mix and reliance on NGCC units to provide baseload service. The commenters stated that EPA has neither evaluated the impacts of such a significant shift in resource roles, nor whether the resulting mix of baseload, intermediate, and peaking resources is feasible. The commenters stated that the proposed rule is estimated to cost Mississippi ratepayers $14 billion by 2030, not including fuel costs. The commenters also cited impacts on industr y and job144 creation. The commenters estimated that using all four building blocks, Mississippi retail ratepayers will experience an 11 percent increase in average delivered electricity prices over the 2017

- 2031 time period, using only Building Blocks 1 and 2, this figure is 14 percent, and that wholesale rates could increase 20

- 25 percent. The commenters projected an increase in electricity production cost of 177 percent increase from 2012 to 2020, measured in real 2012 dollars. The commenters predicted tota l electricity cost is would increase 57 percent from 2012 to 2020 (measured in real 2012 dollars), residential electricity bills were estimated to increase 35 percent, and industrial electricity rates were expected to increase 69 percent (measured in real 2012 dollars). The commenters predicted an increase in natural gas demand by 2020 and an increase in the price of natural gas of 114 percent from 2012 to 2020 (measured in real 2012 dollars).

Commenters stated that the traditional methodology used for ES PS is for EPA to conduct a bottom

- up analysis to determine what emissions reductions are "achievable" and "adequately demonstrated" that can be done at the source at affordable costs for existing units throughout the country. The commenters stated that, EP A has inappropriately analyzed costs at the national level, and the regional level for renewable energy, and not for what is affordable and achievable at the source. The commenters stated that the reduction goals in the CPP appear to be the result of pre

- d etermined Presidential GHG reductions goals, not the product of a bottom

- up source specific economic and technical analysis as required by Section 111. The commenters stated that national cost analysis ignores local impacts creating the opportunity for sig nificant arbitrary localized outcomes that cannot be sustained as a matter of Administrative law.

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvania, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the total national electric generation as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the state had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stated that West Virginia's economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to surrounding state s. The commenters stated that the wholesale reduction of the coal market, along with the costs associated with implementing the Plan, will result in wide

- ranging harm to state and local economies, triggering job loss, shrinking tax bases, a decline in manu facturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwest Independent System Operator, a regional power grid operator, estimated that its 20

- year discounted compliance cost of the rule will b e $55

- $83 billion. The commenters stated that some national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate increases in 43 states, with 14 states facing peak year electricity price increases t hat could exceed 20%. The commenters cited other estimates that wholesale electricity costs will increase by $274 billion; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion.

Comme nters cited EVA that Texas would be amongst the states with the largest economic penalty, and that in Texas, annual household electricity and gas bills would increase by more than $1,050 in 2020, compared to 2012 representing a 54% increase. The commenters stated that the impacts of the proposal to Texas alone exceed many of the cost impacts EPA projects under the proposal for the entire country.145 Commenters stated that affordable and relia r ble electric power is essential to the continued recovery of Indian a's manufacturing economy, which accounts for about 500,000 high

- paying jobs in the State, in addition to 28,000 in the coal industry. The commenters stated that Indiana will experience a disproportionate share of rate hikes, not just because the state is so reliant on coal for its electricity, but also because Indiana has average retail electricity prices below the national average. The commenters cited NERA estimates that the actual increase in rates for Indiana could be close to 12 percent. The commenter s stated that with 1.3 million lower

- and middle

- income households in Indiana, spending an average of 19 percent of their after

- tax income on energy, it State is vulnerable to rate hikes.

Commenters stated that Indiana is particularly vulnerable to the e conomic impacts of the GHG ESPS. The commenters stated that NERA estimates that Indiana's electricity rates will be 12% more costly each year compared to EPA's projections. The commenters stated that with cost increases like those driven by the GHG ESPS, I ndiana will lose manufacturing and agriculture jobs to overseas competitors and the overall Indiana economy will endure great hardship.

Commenters cited an ERCOT study stating that the inclusion of carbon prices resulted in higher average locational margi nal prices (LMPs) compared to the baseline scenario. The commenters stated that in the $20/ton carbon price scenario, the average LMP in ERCOT was $66.17 in 2020 and $81.13 in 2029

-- 34% and 13% above the baseline scenario LMPs for those years. The

comme nters stated that in the $25/ton carbon price scenario, the average LMP was $73.58 in 2020 and $84.28 in 2030

-- 49% and 17% above the baseline scenario estimates. The commenters stated that model results indicate that generators' variable costs by 2029 w ill increase by 15 to 18% in the $20/ton CO2 and $25/ton CO2 scenarios, respectively, compared to the baseline.

Commenters stated that the impacts of the CPP, coupled with the proposed 111(b) regulations, would lead to the premature retirement of many coa l

- fired generation units, and would preclude any likelihood of another coal generation facility being built. The commenters stated that this would increase costs for Ohio's consumers dramatically. The commenters stated that this would harm Ohio's economy a nd the entire wholesale market within PJM. The commenters stated that the CPP would have major cost impacts due to increased capacity pricing and likely transmission upgrades. The commenters stated that coal plants must run less in order for natural gas pl ants to run more that coal plants cannot physically or economically operate as an efficient load

following resource. The commenters stated that coal

- fired generators receiving less revenue due to less frequent dispatch, places tremendous pressure on existi ng coal

- fired EGUs which would make many of the coal

- fired generators that survived MATS vulnerable to retirement, threaten reliability of the grid and costs would increase for consumers. The commenters stated that the combined impact of increased energy m arket pricing, increased capacity market pricing and transmission upgrades would likely result in Ohio consumers paying exorbitantly higher electricity bills.

Commenters stated that an unrealistic and unduly expensive EPA rule will pass through directly
t o the LPC ratepayers. The commenters stated that the citizens of the TVA region, a region with lower per capita income, higher poverty rates and higher percentage of elderly and Social Security recipients than most of the rest of the nation, would thus be obligated to fulfill the financial obligations that will be imposed as a result of EPA's proposed rule.146 Commenters cited a study by Energy Ventures Analysis, that the average annual Wisconsin household will see electricity and gas bills increase by more t han $485 in 2020. The commenters stated that modeling studies performed by PSCW confirm that this rule will increase electricity rates by up to 29%, excluding upgrades to necessary transmission and gas supply infrastructure. The commenters stated that doub le digit rate increases attributable to this rule will have a detrimental impact on this sector of the economy and as a result, impact family budgets across
our state.

Commenters stated that the GHG ESPS will reduce demand for Indiana coal and result in losses of good paying jobs in rural communities. The commenters stated that manufacturing and agriculture are significant users of electricity in Indiana and will suffer significant losses if the proposed GHG ESPS is promulgated. The commenters stated that manufacturing and agriculture in Indiana are dependent on the low cost of electricity. The commenters stated that state's utility rate forecasting experts have predicte d electrical rates in Indiana will rise by more than 30% over the next decade

- prior to considering the impacts of the GHG ESPS. The commenters cited NERA projections that rates will be 12% more costly each year compared to EPA's projections. The commenter s cited an Energy Ventures Analysis prediction that electric rates for industrial customers will increase by 50% by 2020, and natural gas costs in Indiana will increase by 108%.

Commenters stated that in 2020, the average annual West Virginia household e lectricity and gas bills will increase by $750

- a 38% increase

- and the total annual cost of power and gas in West Virginia will grow from $2.7 billion to over $4 billion. The commenters stated that in 2020, the average annual U.S. household electricity and gas bills will increase by $680 in 2020

- a 35% increase

- and the total annual cost of power and gas in the U.S. will grow from $475 billion to over $750 billion. The commenters stated that U.S. compliance costs could total upwards of $366 billion, with 43 s tates facing double

- digit electricity price increases, and CO2 concentrations would be reduced by less than one

- half of a percent, which would result in reducing the average global temperature by less than 2/100th of a degree and reducing the sea level by 1/100th of an inch. The commenters stated that EPA has failed to consider adequately the potential economic impact of its Proposed Rule due to the rise in electricity prices. The commenters cited NERA's conclusions that the rule would cost at least $41 bil lion per year, and under one scenario, $73 billion per year, with a total projected cost of $366 billion to $479 billion over a 15

- year period. The commenters stated that the Proposed Rule would cause 43 states to see a double

- digit electricity rate increa se, and that nationwide, the proposal would cause a 12% to 17% average increase in electricity prices. The commenters stated that fourteen states face peak year electricity price increases that could exceed 20%.

Commenters stated that electricity rates wi ll rise under this rule because using existing sources of electricity is less expensive than building new sources. The commenters stated that the average cost of electricity from existing coal plants is only $36.4 per mWh compared to new natural gas costin g $66.3 per mWh, new wind costing $80 per mWh, and new solar costing $80.3 per mWh. The commenters cited Energy Ventures Analysis, that power and natural gas costs for customers would likely increase by 60 percent in 2020 compared to 2012

-- a cost hike of $ 284 billion. The commenters cited NERA estimates that, when all four of the building blocks are options for the states, electricity prices would increase by 12 percent on average between 2017 and 2031, and when states' options are limited by their resource s, electricity prices would rise by as much as 17 percent. The commenters stated that EPA would thus functionally mandate that Americans use147 less electricity. The commenters cited NERA estimates that, when the consumer share of energy efficiency costs is i ncluded, the total costs related to electricity rise. The commenters stated that in the case in which states can use all four building blocks, electricity

- related costs are projected to rise by about $34 billion per year between 2017 and 2031, where states are limited by their resources that figure shoots up to $48 billion per year. The commenters stated that Americans' electricity bills could rise by as much as $210 annually because of the proposed rulemaking. The commenters cited Policy Navigation Group t hat local governments will have to spend more money buying electricity to power schools, water treatment plants, municipal buildings, and other local government

- provided services; municipal governments' fee revenues will likely decrease, as consumers spend more on electricity and less on goods and services in the local area and therefore do not pay as much in local government fees; and local governments' tax revenues will decline, as consumers spend more on electricity and less money on taxable goods and

se rvices. The commenters cited the Virginia SCC staff estimate that costs for Dominion Virginia Power "would likely be between $5.5 billion and $6.0 billion on a net present value basis, and several billions of dollars of investments in existing coal facilit ies that were made to satisfy existing rules would be placed at risk.

Commenters stated that they had used a mathematical model which included load growth and calculated annual cost of compliance for South Carolina, excluding costs of natural gas pipeline construction required to source additional generation in the state with reliable fuel supply with regard to any scenarios. The commenters provided model outputs predicting 2030 electricity cost increases of 12%, 16%, and 22% for residential, small commerc ial and industrial customers to meet a 772 lb/MWh goal in the current economy. The commenters provided model outputs predicting 2030 electricity cost increases of 5%, 7%, and 10% for residential, small commercial and industrial customers to meet a 990 lb/ MWh goal in the current economy. The commenters provided model outputs predicting 2030 electricity cost increases of 22%, 28%, and 38% for residential, small commercial and industrial customers to meet a 772 lb/MWh goal in a "strong" economy. The commenter s provided model outputs predicting 2030 electricity cost increases of 15%, 19%, and 27% for residential, small commercial and industrial customers to meet a 990 lb/MWh goal in a "strong" economy.

Commenters stated that according to South Dakota's economi c modeling, it is apparent that EPA has misstated the fact that annual electric bills will be reduced for consumers as a result of the Clean Power Plan. The commenters stated that some consumers may take advantage of energy efficiency programs and help red uce their total energy consumption, however not all consumers will do so based on certain energy efficiency market barriers (e.g. more efficient technologies are too costly or replacement of existing technology is not yet needed), and that the impacts will be even greater for those consumers that are unable to invest in energy efficient technology. The commenters stated that SD PUC's modeling identifies there will be adverse rate impacts in the state as a result of the Clean Power Plan, that rates will inc rease drastically and annual electric bills for customers will rise as a result.

Commenters stated that EPA grossly under

- estimates the overall cost of the proposed rule, and cited a recent study estimating the compliance cost of the CPP at least $366 bil lion. The commenters stated that if the CPP, with its interim rate

- based targets, were enacted as proposed, Ameren Missouri would need to construct NGCC capacity prematurely, and that the new NGCC capacity would be dispatched solely for the purpose of the CPP and outside of normal plant148 economic dispatch, resulting in increased cost to customers. The commenters stated that the resource changes resulting from the interim goals of the CPP would have an estimated cost to Ameren Missouri customers of $4 billion due to the new generation and acceleration of other new capacity additions and costs associated with uneconomic dispatch. The commenters stated that the Agency can mitigate the harmful economic impact of its regulatory program by foregoing mandatory inter im goals and instead should only set final goals. The commenters stated that the overall implementation cost of the CPP in terms of energy prices and reduced economic growth is enormous and will be borne by customers and the states for decades to come. The commenters stated that if EPA persists with a rule that requires early and significant progress toward the final goal, all deadlines should be deferred and made contingent upon SIP approval.

Commenters stated that there is uncertainty as to the form comp liance with the Clean Power Plan will take in Texas, and it is not possible to identify unit

- specific compliance actions and associated costs at this time. The commenters stated, based on ERCOT analyses, that if wholesale power is 40% of the consumer bill, increases in average locational marginal price (LMP) would result in a retail energy price increase of 14% to 20% in 2020, and 5% to 7% in 2029. The commenters stated that the increase in wholesale and consumer energy costs compared to the baseline decrea ses by 2029 due to the addition of new solar capacity, which has virtually no variable costs, and the accrual of energy efficiency savings. The commenters estimated increases, due in large part to the CO2 emissions price, which in 2029 imposed a cost of $3 .8 billion in the $20/ton CO2 scenario.

Commenters stated that PJM experienced a significant increase in deactivation of coal

- fired generation resources driven largely by environmental regulations and the improved competitiveness of natural gas over coal as a fuel source. The commenters stated that generation deactivations, as of October 1, 2014, amounted to 20,069 MW of generation dating back to 2002 with the majority of retirements since 2011

. The commenters stated that PJM is also proposing significant future generation deactivations through 2018 of about 12,831 MW

. The commenters stated that generators in Pennsylvania participate in a wholesale competitive capacity and energy market subject to the provisions of the FPA, regulation by the FERC and manag ement of PJM, and the costs to comply with state plans implementing the CAA Section 111(d) emissions guidelines cannot be directly passed on to the customers in this restructured regulatory scheme. The commenters stated that generators participating in a t raditional vertically integrated electric market can directly recover the costs of compliance through rates approved by their public utility commission under a traditional rate base/rate of return model.

Commenters stated that no decrease in electricity b ills or electricity rates would result from the proposed rule, but instead, there will be a substantial increase in the electricity cost for MEAG, the 49 public power communities that it supplies, and the residential and business electricity consumers in t hose communities. The commenters cited NERA that nationally, the delivered electricity price in cents per kWh would increase by 12%. The commenters cited an alternative analysis that considered only two building blocks ("BB 1

- 2"), it which NERA found that the delivered electricity price would increase by 17%. The commenters cited NERA findings that the resulting national increase in energy cost to consumers would be $366 billion to $479 billion (in 2013 dollars) over the same period, and that for Georgia, t he delivered electricity price in cents per kWh over the 2017

- 2031 period would increase by 12% to 13% for the two cases.149 Commenters stated that in 2013, almost 89% of electricity generation in Wyoming came from coal and about 10% came from renewable ener gy resources, primarily wind. The commenters stated that Wyoming had the third lowest average price for electrical power of any state in 2013. The commenters stated that as the Clean Power Plan forces the existing coal power plants to close, replacement re newable or gas power plants will have to be built to accommodate energy efficiencies required by this plan. The commenters stated that the resulting increase in energy rates are estimated to be as high as 26%. The commenters stated that in addition to rate increases due to building new gas or renewable energy power plants, rates will need to be increased to pay for the millions of dollars of pollution control upgrades previously installed by existing power plants in order to meet other EPA air quality requi rements. The commenters stated that this is especially true if these power plants are forced to shut down before they can successfully amortize these pollution upgrades over their useful operational life.

Commenters cited a 2012 study conducted by Kadrmas , Lee and Jackson for the North Dakota Industrial Commission showing that North Dakota will need an additional 2000 megawatts of generation between 2012 and 2032, and the region

- including North Dakota

- will require an additional 2,500 megawatts. The com menters stated that if the proposed rule is not reworked to provide flexibility and allow North Dakota coal plants and other energy sources to meet this need, prices will inevitable go up and reliability will falter.

Commenters cited Energy Ventures Analy sis that by 2020 Colorado residential average annual power bills will increase more than $250 and average home gas heating bills will rise by over $350 forcing the average family to pay $2,164 for heat and power. The commenters stated that industrial rates for electricity will increase by 52% by 2020

. The commenters stated that a few years ago hotel guests experienced an "energy charge" on their bill at check

- out, reflecting then

skyrocketing costs for heating and cooling powered by electricity and natural gas. The commenters stated that the result of changing the power generation mix too quickly will be felt among all Colorado citizens as well as in the highly

- touted tourism industry.

Commenters cited Energy Ventures that Arkansas would see, on average, a 19% increase in wholesale energy prices as a result of the CPP and its carbon regulation

. The commenters stated that another study has concluded that certain Arkansas residential ratepayers could incur up to a 40% increase in their electric bills as a resu lt of Clean Power Plan implementation. The commenters stated that the mass replacement of low

- cost coal generation will require the United States to spend an additional $17.6 billion by 2020 to be spent in compliance and another $53 billion by 2030. The co mmenters stated that industrial electricity costs would increase from about $65.1 billion in 2013 to $165.6 billion in 2030

- a total of 154% by 2030 as a result of the CPP.

Commenters stated that MISO has issued a study finding that the GHG Rule will cut t he amount of energy MISO generated from coal from 69% to 33% by 2030, with little evidence that natural gas, renewables and reduced demand can reliably replace the coal

- fired generating units expected to retire due to the GHG Rule in either the short or lo ng term. The commenters stated that the proposal will significantly drive up energy costs at a time when we are working our way out of the longest recession in US history, with negligible impact on global carbon emissions.150 Commenters stated that any loss of wholesale revenues through permit imposed operating hour or annual MWh restrictions will result in increased revenue requirement from ratepayers. The commenters stated that for OMU ratepayers, the loss of capacity revenues associated with ESGS Unit 1 wo uld result in a 5

- 7% rate increase across all rate classes. The commenters stated that considerable heat rate penalties would be associated with generation levels below design which would increase the number of MWhs that would have to be reduced. The comme nters stated that at a minimum, the loss of wholesale revenues associated with the proposed 18% reduction would result in an electric rate increase greater than 12%. The commenters stated that OMU projects residential rates to increase by over 15% (non

- inf lation adjusted) between 2015 and 2020 without considering impacts of proposed the Proposed Rule, and that compliance with GHG legislation could increase the potential rate increase for OMU's customers by an additional 40%. The commenters stated that EPA's cost analysis in the RIA does not address secondary price effects corresponding to the increased costs of goods produced in manufacturing intensive states such as Kentucky. The commenters stated that the Kentucky Energy and Environment Cabinet's modeling projects that a 10% increase in the price of electricity (10% is conservative) would result in a 1.1% reduction in Kentucky's GDP

- a loss of $2 billion to the state of Kentucky

. Commenters stated that residential rates in Minnesota are projected to incre ase by 11 percent to 14 percent, industrial rates are projected to increase 22 percent, and gas bills are expected to increase by 45 percent. The commenters cited MISO projections that the 20

- year discounted cost of rule within its footprint would be betwe en $55 and $83 billion. The commenters cited an analysis conducted by London Economics that the Clean Power Plan would increase wholesale power prices by up to 40 percent in MISO by the year 2020.

Commenters cited a November 2014 report, "Energy Market Im pacts of Recent Federal Regulations on the Electric Power Sector," prepared by Energy Ventures Analysis that found that between 2012 and 2020, all electric and gas customers would spend 60 percent (in nominal terms; 37 percent in real terms) more in energy costs. The commenters stated that residential increases would be 35 percent (nominal; 15 percent real) while industrial customers would experience electric and gas increases of 92 percent (nominal; 64 percent real). For Kentucky residents, annual electric and natural gas spending would increase by 45 percent (nominal; 23 percent real). The commenters cited a study prepared by IHS Energy, "The Value of US Power Supply Diversity" that concluded that the loss of fuel diversity in the production of electricity will increase retail electricity prices by 25 percent and will reduce the average American household's disposal income by dollar 2,100. The commenters cited a study prepared by NERA Economic Consulting, "Potential Energy Impacts of the EPA Proposed Clean Power Plan" (Oct. 2014), that Kentuckian's can expect 12 percent increases in delivered electricity prices under a "state unconstrained scenario" and 21 percent under a "state constrained scenario". The commenters cited "ERCOT Analysis of the Impacts of the Clean Power Plan" findings that ERCOT consumers could expect retail energy price increases of 14 percent to 20 percent in 2020 and 5 percent to 7 percent in 2029. The commenters stated that increases in utility rates resulting from the proposed CPP com pound the affordability issue for WKU and create additional barriers to upward educational attainment for our younger generation.

Commenters cited NERA Economic Consulting projections that the CPP alone will cause a 12

- 13 percent increase in retail electr icity prices in Georgia plus significant costs that electricity consumers would need to spend to reduce their electricity use. The commenters cited Energy151 Ventures Analysis estimates that the annual energy costs for households in Georgia, including both el ectricity and natural gas, to increase by 31% from 2012 to 2020. The commenters stated that EPA's compliance cost estimates do not capture the subsequent adverse spillover impacts of higher electricity rates on overall economic activity.

Commenters cited NERA estimates that the proposed Clean Power Plan would cost between $41 and $73 billion per year, and cause electricity rates to increase between 13 percent and 14 percent in New Mexico. The commenters cited an analysis conducted by Industrial Energy Cons umers of America estimating that the Clean Power Plan would increase wholesale power prices in the State by up to 23 percent.

Commenters stated that hurdles to construction in Wyoming include limited site acquisition potential and complex endangered speci es issues. The commenters stated that assuming the construction of natural gas generation could be done by 2020 is an unrealistic assumption, given engineering, permitting, transmission and construction timelines. The commenters stated that even assuming the completion of an NGCC plant sometime in the near future, the cost to do so will also have an impact on MRES and its members, as shutting down a unit and replacing it with an NGCC plant would cause an additional increase in wholesale costs of 20%, over and above the 10% cost increase caused by the installation of the SCRs. The commenters stated that as a result, its member community of Pella, Iowa, which receives 100% of its power from MRES, will experience an increase in its wholesale costs of 30% just after we have undertaken major projects to reduce CO2: Pella has retired its local coal plant and MRES is constructing a new 36 MW hydroelectric facility near Pella. The commenters stated that rate increases of this magnitude endanger economic development and present a very real potential that electricity will become unaffordable for the poorest among us and make electricity more expensive for facilities in the United States and potentially cause companies to abandon plants and relocate overseas.

Commente rs stated that prices are projected to increase if Montana ultimately adopts any of the compliance scenarios recently identified by the Montana Department of Environmental Quality ("MDEQ")

. The commenters stated that MDEQ ignored the required build

- out of the transmission grid to support the required increase in renewable energy generation and assumed that wholesale market prices would fully compensate Montana developers for their costs. The commenters stated that the net cost to Montana retail customers wo uld range from $1.7 to $2.7 billion (2013 NPV), with price increases ranging from 13% to 21%. The commenters stated that EPA did not disclose its pricing models in the Proposed Rule.

Commenters stated that Ohio electricity prices that were 9% below the na tional 2013 average, but many Ohio families are struggling with high energy prices. The commenters stated that 53% of low to middle income households spend an average of 20% of their after

- tax income on energy and increased energy prices will further strai n these families

. The commenters stated that projected rate increases will have a devastating impact on manufacturing in Ohio and that EPA has drastically underestimated these prices as reputable sources have reported increases as high as 39%.

Commenters cited NERA Economic Consulting that Ohio would see average annual electricity rates increase by 12 percent, and across the entire United States, these increases are expected to result in a total of $366 billion in new expenditures for consumers

.152 Commenters stated that under localized marginal pricing (LMP) pricing used in the PJM region where Virginia is situated, the clearing price for marginal generation units is paid to all generators located in a geographic area. The commenters stated that if the outpu t of an economic unit is restricted and replaced by a more expensive natural gas unit, the higher incremental cost of a non

- economic unit will be reflected in LMP pricing that is charged to load

- serving entities that, in turn, pass those costs onto their c ustomers. The commenters stated that the higher payments by customers could also be received by the economic unit if its output is not lowered to zero during a restricted period. The commenters stated that the Proposed Regulation fails to address the compo unding impact of LMP pricing.

Commenters stated that forcing Minnesota to reduce its carbon emissions by 41% by 2030 is not fair, as midwestern states do not have to reduce by such a high percentage. The commenters stated that this will force the shutdown of many coal power plants, eliminate thousands of jobs in Minnesota, drive the cost of power up and create a terrible burden on lower income families. The commenters stated that it would like to see No. 3 generating plant stay online to keep some of the

s upport and jobs in Becker, MN.

Commenters stated that use of a state

- wide emissions guideline creates cross

- subsidy issues between Kansas ratepayers, and the state

- wide emissions guideline, in conjunction with the multi

- state option, creates cross

- subsidy issues between states.

Commenters stated that EPA has not fully considered the complexity involved in this type of multi

- state coordination, which has the potential to create confusion and uncertainty for BPA customers and the potential for exposure to h igher costs.

Commenters stated that in Texas the Public Utility Commission cannot simply set a price for electricity that will provide an incentive to build new gas

- fired power plants to replace coal

- fired plants. The commenters stated that it is uncertai n that Texas' electric market structure will be able to react as EPA assumes it can under any requirement to replace coal

- fired with gas

- fired generation. The commenters stated that the proposed reduction in the ozone national ambient air quality standard (NAAQS) can potentially bring large areas of Texas, including the major oil and gas production areas, into nonattainment status for ozone, and without a clearer picture of what a revised ozone NAAQS will be, what areas will be determined to be nonattainmen t and how such designation and subsequent ozone control measures will affect natural gas exploration and production, availability and price, it is impossible at this time to make assumptions that can dispel the many legitimate concerns about the loss of co al

- fired electric capacity in Texas.

Commenters stated that the proposed rule would force Mississippi utilities to generate more electricity from natural gas, even ahead of lower

- cost options. The commenters stated that increasing customers' exposure to v olatile natural gas prices is bad for business and business owners, as well as individual ratepayers. The commenters cited the American Coalition for Clean Coal Electricity that the adoption of these regulations will lead to an increase of electricity rate s of 14

- 19 percent in Mississippi and would place 3,400 direct and indirect coal jobs in jeopardy of being eliminated.

Commenters cited a NERA study projecting an increase in total consumer energy costs of between $366 billion and $479 billion over the period 2017

- 2031, which includes an increase153 between 13 and 15 percent in electricity prices for residential customers. Th e commenters further stated that retirements are likely to impose significant costs on ordinary citizens throughout the country but will be heaviest in the West, with Texas projected to suffer as much as a 54% increase in prices across all sectors. Comment ers Reference: NERA Economic Consulting, on behalf of American Coalition for Clean Coal Electricity et al., Potential Energy Impacts of the EPA Proposed Clean Power Plan (October 2014).

Response 1.a. : Commenters asserted that EPA modeling does not adequate ly reflect source

specific or state

- specific concerns. A number of commenters stated that the CPP will impact particular states and sources disproportionately compared to others. Commenters contended that states more heavily dependent on coal generation wi ll have greater impacts that are not adequately considered in the design of the CPP. The EPA disagrees with these commenters. EPA has directly considered differences that exist in state, locality

, and source circumstances in its development of the CPP and has built into the rule flexibilities that will allow states to make optimal planning choices. The IPM modeling conducted for the CPP does consider source, locality

, and state circumstances to estimate emission reductions, costs

, and economic impacts of
t he CPP, and this modeling is discussed in the IPM documentation available at: http://www.epa.gov/airmarkets/powersectormodeling.html , in the RIA, and in the GHG Mitigation Measures TSD for the CPP Final Rule

.

The EPA has translated the emission performance rates into equivalent state

- level rate

- based and

mass

- based CO 2 goals in order to maximize the range of choices, including application of statewide policy measures instead of source

- specific requirements, that states will have in developing the ir plans. States will play a key role in ensuring that emission reductions are achieved at a reasonable cost. States will have the flexibility to choose from a range of plan approaches and measures, including numerous measures beyond those considered in se tting the emission performance rates. The final rule allows and encourages states to choose effective, lower cost solutions. The June 2014 proposal featured several important elements: the building block approach for the Best System of Emission Reductions (BSER); state

- specific, rather than

source

- specific goals; a 10

- year interim goal that could be met “on average” over the 10

- year period between 2020 and 2029; and a “portfolio” option for state plans. These features were intended to maximize the range of choices that states and utilities could select in order to achieve their emission limitations at low cost while ensuring electric system reliability. The building block approach is a key feature of the proposal that EPA is retaining in the final rule. The state goals reflected an approach to the BSER that was intended to capture both the unique interconnected nature of the utility power sector and the set of actions, strategies and programs that are already under way at the state and utility level that have been resulting in CO 2 emission reductions. They also reflected the fact that each state has its own energy profile, state

- specific policies and needs relative to the production and use of electricity.

The final guidelines continue to embrace the basic ap proach of the proposal, but they also incorporate significant changes that respond directly to the comments, requests

, and concerns of states and other stakeholders, while better serving the critical objectives of the basic approach of the proposal. The mo st significant changes in these final guidelines are: 1) the period for mandatory emission reductions beginning in 2022 instead of 2020 and a gradual application of the BSER over the 2022

- 2029 interim period, such that a state has substantial latitude in

s electing its own emission reduction trajectory or “glide path” over that period, 2) a revised154 BSER determination that focuses on narrower generation options that do not include demand

side energy efficiency measures and that includes refinements to the bui lding blocks, more complete incorporation in the BSER of the realities of electricity operations over the three regional interconnections, and up

- to

- date information about the cost and availability of clean generation options, 3) establishment of source

- sp ecific CO 2 emission performance rates that are uniform across the two fossil fuel

- fired subcategories covered in these guidelines, as well as rate

and mass

- based state goals, to facilitate emission trading, including interstate trading and, in particular, mass

- based trading, 4) a variation on the proposal’s “portfolio” option for state plans

– called here the “state measures” approach

- that continues to provide states flexibility while ensuring that all state plans have federally enforceable measures as a backstop, 5) additional, more flexible options for states and utilities to adopt multi

- state compliance strategies, 6) an extension of up to two years available to all states for submittal of their final compliance plans following making initial submittal s in 2016, 7) provisions to encourage actions that achieve early reductions, including a Clean Energy Incentive Program, 8) a combination of provisions expressly designed to ensure electric system reliability, 9) the addition of employment considerations f or states in plan development, and 10) the expansion of considerations and programs for low

- income and vulnerable communities. See the preamble for more discussion of the changes made to the final rule . The se modifications add to the flexibilities availabl e to states when developing implementation plans and to sources complying with the CPP.

Some commenters stated that reductions of the coal market, along with the costs associated with implementing the Plan, will resul t in ‘wide

- ranging harm to state and lo cal economies, triggering job loss, shrinking tax bases, a decline in manufacturing, and a decline in overall economic competitiveness and social stability’. Responses to these comments are discussed in responses to section 8.6 comments 2, 3, 5, and 7 belo w.
Commenters stated that, EPA has inappropriately analyzed costs at the national level, and the regional level for renewable energy, and not for what is affordable and achievable at the source. The commenters stated that a national cost analysis ignores l ocal impacts. The EPA disagrees that the analysis undertaken analyzes costs at the national level and ignores local impacts. The costs of the rulemaking were developed using the Integrated Planning model and the analysis conducted addresses state, regional and local impacts of the rule. Please see the EPA analysis of costs of the CPP in section V of the preamble for the final rule and the GHG Mitigation Measures Technical Support Document and for compliance costs for the illustrative scenarios see the Regul atory Impact Analysis Chapter 3, for further discussion of the modeling conducted for the rulemaking and costs associated with the rule.

1.b. Commenters discussed that energy markets including coal, natural gas, and electricity are incorrectly modeled.

C ommenters stated that nuclear reactors are the most expensive electric generators available. The commenters stated that the cost of retaining nuclear generation has not been analyzed. The commenters stated that new nuclear generation is also exceedingly ex pensive requiring both federal and state subsidies for construction, putting a burden on consumers many times the costs of renewables. The commenters stated that since there was no analysis associated with non

- air quality health and environmental issues, t here should be no inclusion of nuclear as part of the renewable block and no credits for nuclear generation should be permitted in the carbon rule.155 Commenters stated that the replacement generation and transmission needed to maintain reliability, and the increased use of alternate fuels, will cost more, ultimately increasing the price of electricity for individuals, businesses

, and our community.

Commenters stated that if natural gas is used to supply the majority of energy needs

, price volatility will be come extreme.

Commenters stated that using EIA's projections of future coal and natural gas prices, switching a steam EGU's fuel from coal to gas typically would more than double the EGU's fuel cost per MWh of generation. The commenters stated that that n atural gas is traded in a global commodity market, which is the most volatile commodity market in the world, and that the cost and price volatility of electricity will follow.

Commenters cited an EPA estimate that actual electricity bills received by cons umers will increase anywhere from 1.1 percent to 3.2 percent in 2020, then decrease several percentage points in 2025 and by as much as 8.7 percent in 2030, reflecting "the combined effects of changes in both average retail rates (driven by the effects of all four building blocks) and lower electricity demand (driven by the fourth building block, demand

- side energy efficiency)." The commenters stated that agency's optimistic outlook is based on a vague notion that everything will work out the way EPA thinks it will, but that the utility industry and TAUC contractor members know that almost never happens. The commenters stated that EPA offers no remedy to consumers during the initial electricity price spikes in 2020.

Commenters stated that the CPP will lead to uneconomic dispatch because surviving coal

- fired units (i.e., coal

- fired units that are not forced to retire under the Clean Power Plan) will be used much less in order to meet the aggressive CO 2 emissions limits proposed by the EPA and higher cost unit s such as NGCC will be dispatched more than the lower cost coal units. The commenters stated that it does not appear the EPA has factored in the additional cost of uneconomic dispatch.

Commenters stated that utilities in our region are investing hundreds of millions of dollars to meet current EPA regulations yet the prescribed move from coal to natural gas would force the retirement or restrict the use of the plants which provide our most reliable and economic
power. The commenters stated that the replace ment generation and transmission needed to maintain reliability, and the increased use of alternate fuels, will cost more, ultimately increasing the price of electricity.

Commenters stated that EPA's data show that the proposed rule would cause the closu re of as much as 49 Gigawatts of coal

- based electric generating capacity by 2020, and lead to a 25% or greater reduction in the amount of coal produced for electric generation in that year. The commenters stated that including the MATS rule, the U.S. is fa cing the loss of 126 GW of coal

based generating capacity between 2010 and 2020, more than 10% of the nation's electric generating fleet, and approaching 40% of the nation's coal

- fired capacity. The commenters stated that reduced power supply from retired plants will lead to increased electricity prices, spreading the economic impact to consumers and businesses. The grid will be at increased risk of brownouts and blackouts during peak electric demand periods, endangering the public.156 Commenters stated that fuels used to generate electricity, especially fossil fuels, are often subject to significant price volatility and that natural gas historically has been highly subject to such volatility. The commenters stated that relatively small changes in excess of E PA's projections for the price of natural gas will have immediate impacts on consumers and its conclusion that price increases will be only modest.

Commenters stated that the proposal will result in increases in electricity prices that are likely to be su bstantial in a number of states on top of steadily increasing prices to consumers that are projected by the federal government to continue upward even with out the implementation of this
p roposal. The commenters stated that the cost of producing and deliver ing electricity has been increasing, and is projected to continue to do so even if EPA does not implement this proposal. The commenters cited EIA predictions that costs to residential customers will continue to rise despite the deployment over the past de cades of energy efficiency programs that help offset some of the increase on customers' bills.

Commenters stated that the costs of the capital investment needed for the development of new generation sources and transmission projects will be borne by comme rcial, industrial, and residential ratepayers.

Commenters stated that during the cold winter of 2014, electricity generation from coal

- fueled plants was key to insulating many customers from even higher electric bills. The commenters stated that Southern Company set an all

- time winter peak of 39,130 MW of electricity generation in Q1 2014 and reported $100 million in fuel cost savings for its customers during the quarter, relying heavily on increased coal generation and reduced natural gas generation versu s Q1 2013. The commenters stated that as New England has shifted away from coal to natural gas for electricity generation, its exposure to natural gas price volatility has increased. The commenters cited the Energy Information Administration that U.S. resi dential retail electricity prices increased 3.2% for the first half of 2014 versus the same period in 2013, the highest year over year growth for the first half of the year since 2009, and that New England customers, with less coal generating their electri city than for customers in many other parts of the country, incurred the greatest price increases at 11.8%. The commenters stated that the proposed rule is at odds with robust, competitive energy markets and affordable, reliable electricity in America. T he commenters cited an ERCOT estimate that the CPP will result in rate increases of up to 20% in 2020, not including the costs of transmission upgrades, natural gas supply infrastructure upgrades, energy efficiency improvements, capital costs of new capaci ty, and other costs associated with the retirement or decreased operation of coal generation capacity in ERCOT.

Commenters stated that EPA s eriously u nderestimates the c ost of c omplying with the r ule and the i mpact of the r ule on c onsumer e lectricity and n atural g as p rices. The commenters cited Energy Ventures Analysis (EVA) analysis of the impact of the rule that estimated wholesale electricity costs will increase by $274 billion, non

- power natural gas costs will increase by $80 billion, and additional c apital costs for replacement power will be $53 billion. The commenters stated that these costs excluded investments in natural gas pipeline and electric transmission the rule will require. The commenters stated that forty

- four states will see double

- digi t increases in their wholesale power prices, with 24 states facing increases close to or in excess of 20 percent. The commenters cited a NERA projection that the total cost of the proposal would be $366 billion to $479 billion over a 15

- year period. The N ERA study cited by the commenters157 found that the proposal will cause double

- digit electricity rate increases in 43 states, and a 12% to 17% average increase in electricity prices Nationwide, with fourteen states facing peak year electricity price increases that could exceed 20%.

Commenters stated that the impacts of the CPP, coupled with the proposed 111(b) regulations, would lead to the premature retirement of many coal

- fired generation units, and would preclude any likelihood of another coal generation f acility being built. The commenters stated that this would increase costs for Ohio's consumers dramatically. The commenters stated that this would harm Ohio's economy and the entire wholesale market within PJM. The commenters stated that the CPP would have major cost impacts due to increased capacity pricing and likely transmission upgrades. The commenters stated that coal plants must run less in order for natural gas plants to run more that coal plants cannot physically or economically operate as an effici ent load

following resource. The commenters stated that coal

- fired generators receiving less revenue due to less frequent dispatch, places tremendous pressure on existing coal

- fired EGUs which would make many of the coal

- fired generators that survived MATS vulnerable to retirement, threaten reliability of the grid and costs would increase for consumers. The commenters stated that the combined impact of increased energy market pricing, increased capacity market pricing and transmission upgrades would likely result in Ohio consumers paying exorbitantly higher electricity bills.

Commenters stated that TVA has moved to close some of the most economic and efficient units on its system in response to EPA regulation and that studies have shown that Tennessee resid ential rates and industrial rates may rise as much as 31 percent by 2020 as a result recent EPA rulemakings, including the Proposed Carbon Rule. The commenters stated that the proposed rule facially conflicts with existing federal law and may singlehandedl y undo 80 years of economic development and progress directly attributable to the TVA Act and the New Deal.

Commenters stated that manufacturers operate in a highly competitive global market and cannot automatically pass on higher raw material and energy costs to consumers and still remain competitive. The commenters stated that in addition to the compliance costs utilities will pass on, the proposal would further increase energy costs. The commenters cited an analysis that projected annual costs of $73 bi llion under a likely scenario and projected total costs of the proposal to be $366 billion to $479 billion over a 15

- year period. The commenters stated that this analysis projected that nationwide, the proposal would cause a 12 to 17 percent average increa se in electricity prices, excluding natural gas infrastructure and electrical transmission facilities. The commenters stated that increased use of natural gas by the power sector to comply with GHG emission standards will put upward pressure on natural gas costs. The commenters stated that increased costs and continued uncertainty around the treatment of biogenic emissions will adversely affect U.S. manufacturers of paper and benefits they provide for their communities.

Commenters stated that under the pro posed rule the cost of power would increase substantially more than EPA's estimates due to higher fuel costs, the resulting capacity factor for existing coal

- based units would impose substantial stranded costs, an over

- reliance on natural gas (33% increase in dependence) creates cost and reliability concerns, and unprecedented amounts of costly zero

- emitting sources would be required in an extremely short timeframe. (See section 8.9 for reliability discussion)158 Commenters stated that requiring NGCC EGUs to o perate at a 70% capacity factor could create an enormous economic disadvantage to ratepayers if natural gas prices increase sharply. The commenters stated that ratepayers would be paying higher costs for this energy rather than being able to obtain cheaper energy in the wholesale market. The commenters stated that EGUs may have to bid on natural gas electric generation at a loss to ensure that the RTO dispatches it over coal in order to ensure a 70% utilization rate, and that this will create a much larger economic impact on the ratepayers and utilities than is currently used in costing information by EPA in the proposed rule.

Commenters stated that EPA's cost/benefit calculations take credit for phantom benefits and overstate cost savings from EE to reach the conclusion that electricity bills will be reduced 8% by the CPP. The commenters cited NERA estimates that for the period 2017

- 2031, assuming that all four Building Blocks are used to achieve an average of 22% reduction in CO2 emissions, a minimum of 45 GWs of coal units will be retired, resulting in a 29% decline in coal

- fired generation. The commenters stated that natural gas generation will only increase about 5% on average and the price of natural gas will increase by about 2% on average. The comment ers cited NERA estimates that the cost of delivered electricity will increase by 12% without considering the cost of necessary infrastructure, imposing a significant hardship on much of the population. The commenters cited NERA estimates that to comply wi th the CPP's CO2 goals, employing only Building Blocks 1 and 2, 169 GW of coal units will be retired, natural gas prices will increase by 29%, on average, and the cost of delivered electricity will increase by 17%. The commenters cited NERA estimates that the central region and southeast region will experience the greatest impact from these retirements, and even if reliable electricity can be provided, the cost of generating the electricity will prohibit many who live in rural America from being able to
pur chase it.

Commenters stated that the Proposed Rule would lead to a significant price increase of electricity and in the longer term would significantly increase the cost of energy to domestic manufacturers above business

- as

- usual. The commenters stated th at these electricity and natural gas cost increases would have a significant impact on the energy cost of U.S. manufacturing operations. The commenters stated that based on internal analysis of Caterpillar facilities in the three states where we have the h ighest energy usage, we expect the Proposed Rule would increase our costs by at least $12 million to $40 million over business

- as

- usual from 2020 to 2030. The commenters cited NERA estimates of a national average annual electricity price increase of 12
per cent over the 2017

- 2031 period relative to business

- as

- usual, and even higher increases in states where Caterpillar has key manufacturing facilities, such as a 15 percent increase in Illinois. The commenters cited NERA estimates that natural gas price incr eases in the near term and prices in 2030 that are in line with business

- as

- usual projections resulting in "higher consumer cost for direct consumption of natural gas" of $15 billion nationally over the 2017

- 2031 period.

Commenters cited an analysis by NERA that average U.S. electricity prices would increase by 12 percent per year and the total costs of the rule could be between $366 billion to $479 billion over a 15 year timeframe

. The commenters stated that EPA should perform more detailed analyses abo ut the impacts of this rule which, if finalized, would prevent all of our domestic energy sources from playing a role in a true all

- of

- the

- above energy strategy.159 Commenters cited NERA estimates that the rule would cost between $41 and $73 billion per
year , and cause retail electricity rates in Ohio to rise by 12 percent. The commenters cited EVA estimates that EPA's suite of energy regulations, including the Clean Power Plan, cumulatively would increase the cost of electricity and natural gas by nearly $30 0 billion in 2020 compared with 2012, that gas bills would increase in Ohio by 51 percent and that industrial electricity rates would increase 74 percent in nominal terms.

CPP will increase Arizona fuel and purchased power costs by up to 40%. The commen ters cited NERA conclusions that the cost of delivered electricity for 2017

- 2031 nationally will increase by 12% without factoring in transmission system upgrades, natural gas infrastructure requirements or the impact on natural gas prices. The commenters stated that this conclusion was based on the assumption that all four Building Blocks will be used to achieve an average of 22% reduction in CO2 emissions with a minimum retirement of 45 GWs of coal units, resulting in a 29% decline in coal

- fired generatio n. The commenters stated that if the energy market only utilizes Building Blocks 1 and 2 delivered electricity cost will increase 17%, 169 GW of coal units would be retired and natural gas prices would increase by 29%.

Commenters stated that EPA's regulat ions will increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012, and that the typical household's annual electricity and natural gas bills would increase by $680, or 35 percent, from 2012 compared to 2020, escal ating each year thereafter as EPA regulations grow more stringent

. Commenters cited ERCOT estimates that "energy costs for consumers may increase by up to 20% in 2020" under EPA's proposal, without accounting for transmission and natural gas supply infras tructure and other costs. The commenters cited NERA estimates that the proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% relative to a base case without the rule, and that the weighted average price increase across all c ustomer classes (Residential, Commercial, and Industrial) is projected to be 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that EPA's proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% re lative to a base case without the rule. The weighted average price increase across all customer classes (Residential, Commercial, and Industrial) is projected to be 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that reside ntial rates could increase by approximately 3.3 cents per kilowatt

hour under the proposed standards, a 25% increase, relative to a base case without the rule, equivalent to an increase in average household electric bills of $33 per month or nearly $400 pe r year which would impact all Texans but is particularly harmful for those with marginal income, such as elderly customers on fixed incomes or low

- income customers.

Commenters stated that EPA understates the costs of the proposal on ERCOT electricity

cons umers. The commenters stated that EPAs modeling implies a 9.9% retail price increase for ERCOT by 2020, falling to 3.9% by 2030, however, the NERA analysis estimates that average 2020 to 2030 delivered electricity prices could jump by 25% or more.

Comment ers stated that the current building block plan would cost electric ratepayers up to 40% more in fuel and purchased power costs between 2020 and 2030 as a result of fuel switching and expected increases in natural gas prices over time. The commenters state d that increases in natural gas demand resulting from implementation of the Clean Power Plan are likely to raise gas160 prices and overall consumer prices nationally and in Arizona. The commenters stated that the impact of an additional gas demand required fo r compliance would come at a time when exports (liquefied natural gas and pipeline exports to Mexico) are also growing rapidly. The commenters stated that the price increase under the Clean Power Plan is around $1.35 on average between 2020 and 2030, with deltas in the $1.50

- 2.00/MMBtu range by the end of the 2020s. The commenters stated that the market has recently seen a sharp increase in the volatility of market prices in regions where shale gas development has outstripped the infrastructure capability t o deliver to markets where the gas is needed. Price spikes in the northeast last winter, for example, exceeded $123.50/MMBtu.

Commenters stated that current market power prices in competitive markets do not support making some capital investments such as a number of heat rate improvements, and this could lead to further shut downs of coal plants beyond EPA's assumptions. The commenters stated that in the regulated markets, additional costs, if approved by the state PUC, will be passed on to the customer th rough higher prices.

Commenters stated that it was very concerned about the affordability, stability and reliability of the supply of electricity in the wake of current and planned power plant retirements and especially, proposed reductions in carbon emis sions in the U.S. Environmental Protection Agency's (EPA) Clean Power Plan.

Commenters stated that the four Building Blocks EPA has based the rule on suffer from technical and economic problems that will result in this regulation costing far more than EPA projects. The commenters cited NERA projections that electricity prices will experience rate increases from a low of 12% to 17% over the period 2017 through 2031, and natural gas prices will increase from 2% to 29% depending on the scenarios that are exec uted

. The commenters cited Energy Ventures Analysis estimates that electricity and natural gas costs for residential, commercial, and industrial customers will increase by 60% by 2020 because of the GHG ESPS, the MATS rule and other EPA regulations aimed a t the electric power sector. The commenters stated that this will cost $284 billion dollars by 2020, with the total cost increasing with each additional year of implementation and residential energy costs will increase by $680 per year by 2020. The comment ers stated that total energy costs for industry will increase by 64%, a $200 billion increase that will be passed on to their customers or result in factory closures and operations moving overseas

.
Commenters stated that it is concerned about the increased electricity costs that a re

- dispatch of the power market could precipitate. The commenters stated that electricity cost increase estimates that range from 7% to 17% and that regional costs can significantly as in the New England area over the past winter, where lack of transport coupled with regionally higher demand and little supply caused spot market pricing fifteen times over normal regional pricing and twenty times over pricing nationally. The commenters stated that local road blocks to innovation such as those raised against coastal wind farms clearly demonstrate that switching to alternate energy sources will not be easily or quickly implemented. The commenters stated that as a manufacturer in a global marketplace, competitive pressures are high and i ncreasing production costs in one region of the world can shift production to other regions with lower costs, which will not decrease global carbon emissions.161 Commenters stated that over

- reliance on any one fuel source creates extraordinary volatility and risks for consumers and the economy. The commenters stated that when 8,358 MW of coal generation are forced to retire (as per EPA's estimates for 2020) as a result of Block 2, numerous Texas jobs will be lost and the resulting increase in natural gas pric e will create more volatility and significantly higher retail prices for Texas electric consumers.

Commenters cited NERA Economic Consulting projections that the CPP will cause a 12

- 13% increase in retail electricity prices in Georgia, plus the significan t costs that electricity consumers would need to spend to reduce their electricity use. The commenters cited a projection by Energy Ventures Analysis that the annual energy costs for households in Georgia, including both electricity and natural gas would i ncrease by 31% from 2012 to 2020

. The commenters cited the North American Electricity Reliability Corporation (NERC) conclusion that the agency's proposed regulatory deadlines "would increase the use of controlled load shedding and potential for wide

- scale , uncontrolled outages ." The commenters stated that during the 2014 polar vortex, some regions of the country experienced a price spike on the electricity spot market and demand for natural gas in excess of supply, which would have led to interruptions of electricity service if other generating resources

- particular those powered by coal

- were not there.

Commenters stated that as result of area

- wide changes in wholesale and retail electric supply, there is currently a very competitive marketplace for the sale of capacity and energy. The commenters stated that determining the "market rate" for capacity is a constantly changing and dynamic exercise. The commenters stated that Valley Electric Association obtained a forward power estimate from ACES Power Mark eting showing on

- peak power demand increases from the 2017

- 2018 to 2028, however, the market implied heat rate will decline from 2018 to 2020.

Commenters stated that the proposal overestimates what is technically feasible, and/or entails costs significan tly higher than those projected by EPA. The commenters stated that if finalized in its current form, the proposal would substantially increase the rates Wyoming consumers, including WIEC's members, pay for their electricity, and could significantly impact the reliability of the electrical service they receive.

Commenters stated that the rule as proposed will result in significant electricity rate increases and additional energy costs for consumers which will fall most heavily on the elderly, the poor, and those on fixed incomes. The commenters cited a U.S. Chamber of Commerce study indicating that a plan of this type would increase America's electricity bills, decrease a family's disposable income, and result in job losses.

Commenters cited NERA Economic C onsulting conclusions that the proposed rule would cost $366 to $479 billion over a 15

- year period. The commenters cited Energy Ventures Analysis estimates that it would cost $407 billion over a ten

- year period. The commenters stated that these projection s do not include the additional costs of: (1) new transmission investments to access more remote high wind areas and to react to changes in power flows; (2) additional transmission ancillary services to handle greater amounts of variable wind and solar gen eration; (3) higher gas rates from increasing costs for pipeline compression; and (4) GDP changes triggered by raising energy prices. The commenters stated that more than 40 states will see double digit increases in electricity prices and 14 or more states will experience increases that exceed 20 percent. The162 commenters stated that this past winter cold temperatures brought the cost of electricity above $1,000 per megawatt

- hour on spot markets as compared to the average wholesale cost of $42 per megawatt

- ho ur for that region. The commenters cited a study showing that if we experience another cold winter wholesale power prices would jump 27

- 55 percent across different regions and businesses and households would pay $35 billion more for natural gas. The commen ters stated that a combination of another cold winter followed by a warmer than usual summer would cost consumers $100 billion in higher electricity and natural gas prices. The commenters stated that most of the lost base load generating capacity caused by this proposal will be replaced by new fossil

- fuel capacity that will not be regulated and the combination of emissions from "unregulated sources" and increased emissions from existing sources will off

- set at least one

third of the reductions EPA projects from existing units in the power sector.

Commenters stated that replacing coal

- powered generators with natural gas generators will increase the cost of electricity for consumers, increase the volatility of electric prices, and decrease overall system reli ability

. The commenters stated that by shifting Arkansas's baseload energy fuel from coal to natural gas, electric reliability will be dependent on the ability of natural gas generators to contract for firm natural gas transmission rights and subject to th e increased costs associated with these rights.

Commenters stated that the proposed rule threatens its viability. The commenters stated that EPA's Regulatory Impact Analysis indicates that the rule would cause Appalachian coal production for electric gene ration to decline from 140 million tons in the 2020 base case to 87

- 91 million tons, versus 246 million tons of coal in 2009. The commenters stated that decreased coal production will result in significant job dislocations, income losses, and diminished ta x bases. The commenters stated that each coal job has a 5 to 1 multiplier effect on the mine services, consumable supplies, and the local communities where the mines and mine employees spend the revenues and household income generated from coal sales. The commenters stated that the proposed re

- dispatching of coal generation to natural gas combined

- cycle units, unrealistic energy efficiency goals, and new renewable energy targets would create a cycle of increasing coal fired power plant and mine closures, di rect and indirect job losses, and higher electricity prices adversely impacting manufacturing and other key job

- intensive sectors.

Commenters stated that the proposed rule will severely impact coal industry members, workers in allied industries such as ra il transportation, equipment sales and manufacturing, and the communities where those activities are located. The commenters stated that this regulation will put Colorado citizens at risk for lost jobs and higher electricity costs. The commenters stated th at by reducing the U.S. fleet of coal

- fired generating units by more than one

- third by 2020, the regulation will place U. S. consumers at risk of "rolling blackouts" and service disruptions.

Commenters stated that the proposal has the potential, based on EPA 2025 IPM, to shutter over 13,000 MW of the 22,000 MW of coal fired generation in the state of Texas, including San Miguel. The commenters stated that if the EPA's IPM is correct, there are 350 power plant and mine workers at San Miguel that will be pu t out of work due to this rule

- a full 20 years before the useful life of the unit has been reached.

Commenters stated that the CPP would have the effect of significantly reducing power generation from coal

- fired EGUs, which would immediately threaten th e supply of power163 available for distribution to consumers and force the retirement of hundreds of power plants. The commenters stated that hundreds of thousands of coal miners and supporting employees would face layoffs due to the decrease in coal demand. The commenters stated that due to the significance and size of the coal industry, enactment of the CPP would push the national economy along a similar trajectory as the coal industry itself. The commenters stated that by 2030, some 114 GW of existing capac ity will be removed from the grid due to closures of coal

fired EGUs The commenters stated that most analysts predict that the cost of electricity will increase significantly, amounting to an aggregate increase of nearly $300 billion by 2030

. The
commenter s stated that in cases of power shortages, which are a distinct possibility due to increased reliance on redispatch to NGCC, price spikes in excess of 10 times the average rate are likely

. The commenters stated that costs are particularly significant for l ower

- income households, which the CPP is expected to disproportionately impact

. Commenters stated that EPA did not conduct a rigorous cost/benefit analysis, and therefore has likely under

- estimated the costs to many states' economies. The commenters stated that the Regulatory Impact Assessment (RIA) did not incorporate the price risk associated with increased reliance on historically price

- volatile natural gas. The commenters estimated that state GDP would be reduced by $2 billion with a ten percent increas e in the cost of electricity. The commenters stated that the final rule should include a "safety net" provision that would allow states that have increased exposure to natural gas price volatility to be able to dispatch their remaining coal

- fueled fleet, i f doing so will offset rate impacts that exceed ten percent.

Commenters stated that it is unclear if the IPM model incorporates stranded costs or ancillary transmission and other investment costs into its projections of electricity rates impacts. The

comm enters stated that ratepayers would still be required to pay the costs associated with retired units in addition to the costs of any other measures that would have to be deployed in response to the rule.

Commenters stated that the proposed rule needs more explicit and robust economic forecasting for impacts to the natural gas infrastructure to ensure system requirements can be met and that increasing NGCC capacity factors for all states will require a significant increase in natural gas supply through dril ling and distribution infrastructure.

Commenters stated that it is unreasonable for EPA to base its analysis of the costs of the proposed greenhouse gas New Source Performance Standards on a range of natural gas prices no wider than the most recent foreca sts and that actual prices are very likely to fall outside these bounds. The commenters stated that the Energy Information Administration (EIA) states that it cannot forecast the future price of natural gas. The commenters stated that forecasts of natura l gas prices have proven to be poor predictors of actual prices, with large forecast errors and biases in the most widely used forecasts.

Commenters stated that the difficulty in extrapolating based on past and current trends is that structural changes in the natural gas market can make past trends and correlations irrelevant. The commenters stated that forecasters of natural gas prices have not only missed every historic turning point in long term trends, they have acknowledged their inability to predict when future turning points would occur. The commenters stated that using structural models to forecast requires an ability to identify all the exogenous factors that might cause a shift in trends164 and a basis for forecasting how they will change in the fu ture and that natural gas price forecasters have had little or no success in doing so.

Commenters stated that the EIA's history of forecasting is exemplary of the difficulties in predicting future natural gas prices. The commenters stated that throughout the 1980s, EIA consistently forecasted the bubble bursting, but each year the increase was postponed as observed prices stubbornly refused to increase. The commenters stated that in 1995, EIA made a fundamental change in its forecasting methodology and beg an predicting flat prices in the $3

- 4/Mcf range, but they were too late to capture the earlier lower trend and did not accurately anticipate how the contemporary natural gas market was changing: it was exactly at this time that the prices began a rapid e scalation. The commenters stated that EIA's predictions from 2003 up to 2008 were that high initial prices would be followed by swift descents. The commenters stated that in 2008 EIA changed the direction of its forecasts again and began to predict that n atural gas prices would remain high and increase over time. The commenters stated that as a result of expansive shale development and the economic downturn, natural gas prices began a rapid downward movement with which EIA has tried to catch up since 2009. The commenters stated that the averages of the percentage error by projection distance shows that the EIA forecasts in a given year erred on average by about 29%. This error ranges from 10% to 47% depending upon how far into the future the AEO is forecast ing. The absolute value of the error on average is $2.68/Mcf and varies between

- $6.44/Mcf and $3.85/Mcf. The commenters stated that a projection distance as small as 2 years out yields forecast errors as extreme as plus or minus $5/Mcf. By eleven years ou t, the difference ranges from $17/Mcf to

- $5/Mcf.

Commenters stated the NPC projections appear to be more accurate for 1

- 2 years out but in the long term they are as inaccurate as those of EIA. The commenters stated that A retrospective analysis of the N YMEX future prices indicates that on average NYMEX future prices were in error by about 20% or $2.28/MMBtu and the error steadily grows as the forecast looks further out in time from $0.82/MMBtu in the first month to $3.17/MMBtu in the 36th month demonstra ting that the accuracy of the forecasts become increasingly poor over time. The commenters stated that forecasts of natural gas prices made by entities that had significant financial incentives to make an accurate forecast still have proven to differ grea tly from realized prices. The commenters stated that long with the rest of the nation, investors in LNG import facilities failed to foresee the drop in natural gas prices brought about by both unexpected technological improvements, particularly related to the development of shale gas, and the economic downturn of 2008.

Commenters stated that natural gas prices are affected by economic activity, prices of other energy goods, regulatory policies, and changes in technology and that the evolution of all of these inputs is highly uncertain and for the most part unpredictable. The commenters stated that some examples of unforeseen and unpredictable events such as shocks in the marketplace include: the September 11th terrorist attacks, the bursting of the high technology bubble in 2000 and more recently the Financial Crisis. The commenters stated that a decline in crude oil prices causes less oil drilling to occur. As a result, associated natural gas production, which is coproduced with crude oil, also declines. The commenters stated that regulations limiting air emissions from p ower plants (e.g., the Mercury and Air Toxics Standard Rule) could increase demand for cleaner burning natural gas and a Clean Energy Standard could also increase demand for natural gas. The commenters stated that technological breakthroughs in any part o f the165 natural gas value chain have been nearly impossible to predict accurately. The commenters stated that a temporary or permanent ban on the use of fracking would end development of the large shale gas potential upon which current low natural gas price forecasts rely. The commenters stated that with carbon dioxide being considered a pollutant to be regulated by the EPA, future policies and regulations can further alter the course that natural gas prices may take. The commenters stated that restrictive l egislation aimed at curbing CO 2 emissions may reduce the use of coal for electricity generation leading to higher demand for natural gas, but natural gas also emits CO 2 and thus could also be impacted negatively by future regulations. The commenters stated that one of the reasons that there is such controversy about the value and accuracy of forecasts is the failure to accompany each forecast with a statement about its likely error bounds. The commenters stated that given the signal failure of past forecas ts of natural gas prices to capture discontinuous changes in trends, any evaluation of future investments and policy impacts should be based on an appropriately wide range of alternative scenarios. The commenters stated that EPA failed to consider all the likely consequences of the rule, and the most likely outcome is that natural gas prices will be outside the bounds that were tested for much of the forecast period.

Commenters stated that by relying on an unrealistically limited range of forecasts, regula tors will steer the market to make decisions that are only desirable under the limited range of outcomes considered and potentially excessively costly under other conditions. The commenters stated that regulations based on a narrow set of forecasts would r educe the diversification of decisions that the market would likely make on its own, and estimates of the cost of such regulations will ignore the cost of the added risk the economy bears if outcomes fall outside the chosen range of forecasts. The commente rs stated that basing a regulation on such a narrow range of forecasts amounts to substituting the regulator's opinion on future prices for those of private sector investors.

Commenters stated that the impact of higher natural gas pricing goes well beyond the cost of electricity however as many manufacturing industries use gas as a fuel or raw material and recommended that EPA include these secondary cost impacts to manufacturing, as well as the heating cost impact for commercial and residential natural ga s users, in the economic impact assessment for the proposed rule. The commenters stated that between 2002 and 2011, natural gas used for electricity generation was four times as expensive as coal and the U.S. Energy Information Administration (EIA) project s real natural gas prices to increase 31% between 2010 and 2030. The commenters stated that those states with lower energy cost structures will be most at risk for higher rate increases and most energy intensive manufacturing is also located in states wit h low energy cost structures. The commenters recommended that EPA allow states the flexibility to mitigate the impact on energy intense industries, including flexible incentives for energy efficiency or cost offsets for increased energy prices.

Commenters stated that the significant switch of generating capacity from coal to natural gas driven by this rule coupled with the accelerating manufacturing use of natural gas and the expected future significant export of natural gas for geopolitical considerations has the potential to fundamentally alter the natural gas supply supply/demand equation, increase natural gas pricing volatility, and impair the US manufacturing renaissance from its full potential as a job

creating engine of economic growth. The commenter s stated that these pressures in the US would have a significant detrimental affect not only on the broad US manufacturing base but166 specifically on the production of secondary (recycled) aluminum given the role natural gas as a key input into the secondary aluminum recycling process.

Commenters stated that the increase in natural gas consumption directly attributable to the Proposal would result in price increases averaging approximately $1.35 per million British thermal unit (MMBtu) between 2020 and 2030, and surging as high as $2.00/MMBtu at times.

Commenters stated that EPA's economic impact analysis may be flawed. The commenters stated that EPA assumes that natural gas prices will remain relatively flat through 2030 and fails to consider the historical price volatility of natural gas and the potential for demand for natural gas by other industries, including transportation and manufacturing to impact natural gas prices. The commenters stated that further investments in energy efficiency will be much mor e costly, increasing the cost of electricity for retail customers. The commenters stated that the proposed rule should include mechanisms to provide cost certainty for utilities to protect consumers from excessive prices and price volatility.

Commenters c ited EVA projections that average annual household gas and power bills would increase by 35 percent from 2012 to 2020 if these regulations are finalized. The commenters stated that EPA's proposal to increase the use of natural gas derived electricity witho ut increasing its cost is unrealistic. The commenters stated that EPA's assumption that gas

- fired CCGTs can operate at an average utilization rate of 70 percent does not reflect real

- world experience or reasonable modeling of the U.S. power markets.

Comm enters cited PACE Global estimates that this incremental increase in national consumption levels would result in Henry Hub price increases close to $3/MMBtu over a non

- carbon scenario. The commenters stated that volatility could be very significant with gr owth in power sector natural gas demand projected under the CPP.

Commenters stated that the proposed rule does not sufficiently allow for population growth, or economic growth. The commenters stated that the proposed rule will result in higher natural gas prices and therefore electric rates to customers, which in turn may stifle growth.

Commenters stated that there are long

- term costs to losing diversity in power production

. The commenters cited the Orlando Utilities Commission that the required "shift to the use of natural gas as [the] primary fuel source" in the state "would cause a significant shift away from fuel diversity for the state," and consequently risk an end to "rate stability for all ratepayers, especially at times of volatility in the natura l gas market." The commenters stated that energy shortages and price shocks could occur in an insufficiently diversified energy system.

Commenters stated that the proposed rule will greatly increase the cost for electricity, natural gas, and LPG, and thre aten the steady supply of these resources

- all to the detriment of Indiana farmers and agricultural businesses. The commenters stated that the proposed rule will decrease the available supply of natural gas, which will drive up costs for farms and agricul tural products that farms utilize. The commenters cited NERA projected compliance costs of $41 billion to $73 billion per year and total costs between 2017 and 2031 of $366 billion to $479 billion (in 2013 dollars). The commenters stated that EPA ignores t he impact of higher natural gas and LPG prices that will be created by this rule on other economic sectors, such as residential, commercial167 and industrial heating, agricultural use, and as feedstock in chemical manufacturing. The commenters stated that far mers and agricultural businesses are particularly sensitive to increases in natural gas costs since they are both significant users of natural gas and LPG, and because they are significant users of products such as fertilizers which use natural gas as a ch emical feedstock. The commenters cited NERA projections under option 1 that electricity prices will experience rate increases from a low of 12% to a high of 17% over the period 2017 through 2031. The commenters stated that natural gas will be in greater de mand for electricity generation, which leaves questions regarding pipeline capacity and the impact on supplies for residential heating, agricultural use, chemical feedstocks and other common uses. The commenters stated that the current diversity of energy sources for electrical generation in the United States provides a balance of cost, supply, availability, risk and other factors that ensure we have a steady stream of relatively low cost electricity and natural gas. The commenters stated that building Bloc ks 2 and 3 will disrupt that balance and do not provide the mechanisms needed to ensure cost

effective development of new energy sources. The commenters stated that the variability in market pricing for gas reflects the intangible nature of the fuel, and t hat a transition towards greater usage of these fuels will increase the nation's vulnerability to reliability problems. The commenters stated that existing natural gas pipelines are operating at near capacity today, and some regions have inadequate capacit y. The commenters stated that in order to create an infrastructure to ensure it remains consistently cost

- effective the country will need to invest in thousands of miles of pipelines and millions of cubic feet of storage capacity and that EPA has not inclu ded the billions of dollars needed for these investments in their cost estimates. The commenters stated that natural gas prices are sure to rise above today's lower

- than

- average levels because of increased demand for gas created by new NGCC generation and natural gas supplies are prone to rapid price changes due to shortages which lead to incalculable costs. The commenters stated that it is uncommon to find natural gas supply contracts that extend for more than one year. The commenters stated that because natural gas prices were at or near historical lows when the proposed rules were drafted, any supply or demand issues will drive prices further upward. The commenters stated that it is dangerous public policy for EPA to base regulatory decisions on the high ly volatile economics of natural gas prices, particularly when the current prices are on the low side of the volatility curve.

Commenters stated that natural gas

- fired electric generation throughout the United States will far exceed that which EPA anticip ates in its CPP and that prices will spike as a result of the CPP The commenters stated that natural gas

- fired generation in Oklahoma will more than double by 2020, which will place significant upward pressure on natural gas commodity and transportation
pr ices

. The commenters stated that the EPA has failed to fully assess the direct and substantial indirect impacts the CPP will have on the economy as well as the day

- to

- day functioning of society thereby disregarding these price impacts.

Commenters stated t hat should natural gas prices return to the volatility seen in past years, the diminution of resource diversity from abruptly shuttering the coal plants will increase risk in Arizona's electricity market and destabilize electricity prices for consumers.

C ommenters stated that manufacturers and others who use natural gas for purposes other than electric generation will also see projected cost increases up to $50 billion. The commenters stated that 187,000 direct and indirect job will be lost in the utility, rail, and coal industries alone by 2020 and these sectors will lose cumulative wages and benefits of $208 billion by 2035. The168 commenters stated that by forcing the retirement of a significant portion of the state's electric generation capacity, the rule puts at risk the reliability of Texas' electric grid, the failure of which can have extremely dramatic financial impacts, as well as public health and safety impacts.

Commenters stated that EPA is creating conflicting messages with the goal of making coal plants more efficient and then limiting its production and efficiency, with a predilection for natural gas generation. The commenters stated that the proposed CPP will change the market dispatch of generating units by changing the most economic generating resource to the most environmental friendly resource creating a significant cost shift; such a shift in market prices will have an adverse impact on consumers. The commenters stated that we will be more dependent on the cost of natural gas and although th e long term market appears to be stable due to the science of fracking, switching fuels to a single source becomes risky and opens the door for price fluctuations to the consumers as a result of natural gas prices. The commenters stated that they expect to see more development of natural gas plants as long as natural gas is abundant and priced competitively.

Commenters stated that EPA should not be claiming benefits that have already been achieved, but rather should be limited to those benefits that are an ticipated from the implementation of the proposed rule. The commenters stated that with respect to the cost of implementing the proposed rule, EPA estimates only 5.4 to 8.8 billion dollars. The commenters stated that first, these costs are unrealistically low because EPA assumes that the utilities can easily switch fuels for existing sources and build new power plants that rely on natural gas and renewable energy. The commenters further stated that EPA also minimizes the cost of the proposed rule because it unrealistically assumes that the price of natural gas will remain at its historically low levels for the next 25 years; and in addition, higher energy costs and disruption in energy delivery and capacity will impose significant new costs on all energy con sumers. The commenters suggested that when these reasonably anticipated costs are considered, the cost of the proposed rule could increase tenfold.

The commenters stated, as EPA has recognized, compliance flexibility is both necessary and appropriate in t he context of section 111(d) rules for power plants. The commenters stated although the electric system is constructed and operated to accommodate fluctuations in power demand and supply, the changes EPA proposes to require in the power sector will lead to significant reliability, transmission, and natural gas supply issues

- particularly if states are not given broad flexibility to design workable plans for their EGUs that will protect ratepayers from significant rate increases, prevent potentially signific ant stranded costs for affected EGU owners, and ensure the continued reliability of the electric system. In addition,the commenters stated broad compliance flexibility will help to ameliorate the otherwise significant potential that compliance costs stemmi ng from the Proposed Rule will lead to economic upheaval in electricity and fuel markets.

Commenters stated that dispatch is the short

- run means by which the BES meets three constraints essential to its reliable operation: Matching generation from power p lants with energy consumption by end users in real time across the entire country; avoiding combinations of power plant operation and energy consumption that exceed the design capability of the transmission system; and avoiding configurations of generation and consumption that lead or could allow unstable operating conditions for the power plants and other key elements of the grid. The169 commenters stated that dispatch must also support: the synchronized and stable operation of all generating equipment; volta ge and reactive power maintained at appropriate levels throughout the entire system; and ensuring the entire system is configured so it can quickly return to these equilibrium conditions after a disturbance, such as a short circuit, loss of generation, or loss of a transmission element. The commenters stated that under security constrained economic dispatch, the variable operating costs of power plants

- including the cost of any emission allowances or permits they must buy

- influence their operation. The commenters stated that most existing cap and trade systems have various kinds of safety valves, cost containment reserves, or other price

buffering policy features, and that imposing a strict absolute limit on emissions, and requiring the dispatch to respe ct that limit as an absolute constraint, can lead to extremely high allowance and power prices.

Commenters stated that adoption of the proposed rule will result in a resource portfolio that is unreasonably leveraged toward natural gas

- fired generation, an d added such a shift would be imprudent from economic, security, and reliability standpoints. The commenters stated that the diversification of Arizona utilities' resource portfolios not only affects reliability but directly impacts rate base. The commente rs stated that the rates that ratepayers ultimately pay include the utilities' costs to provide service.

Commenters stated that conservatively, the delivered cost of coal was assumed to be stable, even though demand for the product would go down significan tly as a result of the Rule. Commenters stated that the net effect over the period 2020 through 2030 was a cost increase to our communities of $77 million.

Commenters stated that in total, complying with the Proposed Rule may cost Montana electricity

cons umers $1.12 billion (2013 NPV). Commenters stated that for their projects, for point of reference, the Proposed Rule would result in a 9% increase in average retail prices; that said, at this stage it is very difficult to project the percentage increase ex pected for wholesale prices. Commenters stated that however, they anticipate that wholesale prices will rise substantially, given the impact of the Proposed Rule on both regulated and unregulated electric generators.

Response 1.b. : Commenters disagreed wit h the modeling of energy markets used by the EPA to develop the CPP. A number of commenters asserted that increased electricity generation from natural gas will cause natural gas prices to rise

, resulting in economic impacts. Commenters stated that EPA has not fully considered the potential volatility and increases in natural gas prices that will occur in the future potentially resulting in higher costs to consumers of electricity and natural gas . Som e commenters asserted that EPA had not fully considered p ipeline infrastructure and transmission requirements of the CPP. Others stated that EPA had not considered market structure within the electricity market nor capital market requirements associated with retirements and new power plants. Commenters also disc ussed that electricity prices will rise as a result of the CPP. Commenters also took issue with the propos ed treatment of nuclear power generation. In the final rule, the EPA made refinements to the building blocks, and these are reflected in the final BSE R

, including the exclusion of the proposed nuclear generation components. Comments relating to the impact of CPP on system reliability are discussed in section 8.9 of this response to response to comment s document.170 EPA believes that it has fully considered the impact of the CPP on energy markets in developing the final rule, including changes relating to the generation mix. EPA used the Integrated Planning Model (IPM), developed by ICF International, to evaluate the impact of the CPP on energy markets. The IPM electricity demand projections are based on projections from the Energy Information Administration (EIA), adjusted for demand

- side energy efficiency measures that can be reasonably anticipated to occur under the Clean Power Plan. The IPM modeling conducted for the CPP is discussed in detail in the RIA Chapter 3 and in the GHG Mitigation Measures technical support document. IPM modeling of natural gas prices uses both short

- and long

- term price signals to balance supply and demand for the fuel across the modeled time horizon. As such, it should be understood that the pattern of IPM natural gas price projections over time is not a forecast of natural gas prices incurred by end

- use consumers at any particular point in time. The natural gas market in the United States has historically experienced some degree of price volatility from year to year, between seasons within a year, and during short

- lived weather events (such as cold snaps leading to short

- run spikes in hea ting demand). These short

- term price signals are fundamental for allowing the market to successfully align immediate supply and demand needs. However, end

- use consumers are typically shielded from experiencing these rapid fluctuations in natural gas prices by retail rate regulation and by hedging through longer

term fuel supply contracts by the power sector. IPM assumes these longer

- term price arrangements take place “outside of the model” and on top of the “real

- time” shorter

- term price variation necessary to align supply and demand. Therefore, the model’s natural gas price projections should not be mistaken for traditionally experienced consumer price impacts related to natural gas, but a reflection of expected average price changes over the period of time represented by the modeling horizon. The modeling conducted by EPA does consider gas pipeline infrastructure needs and additional transmission requirements. The modeling conducted by EPA also considers retirements and capital requirements associated with power plant needs.

The EPA recognizes that states will ultimately design implementation plans and that actual compliance by affected sources may differ from that modeled by EPA. Flexibilities built into the CPP will allow for states to consider strategie s that may lower costs and potential impacts of compliance.

1.c. Commenters cited studies that report large cost and economic impacts will result from implementation of the Clean Power Plan

Commenters stated that the proposed rule will increase energy c osts and reduce the diversity of growth. The commenters stated that EPA estimates annual compliance costs between $5.4 and $7.4 billion in 2020, hitting $8.8 billion in 2030; but these numbers include only future power sector compliance costs, failing to c apture the residual impacts of higher electricity rates on overall economic activity. Citing a recent Wall Street Journal editorial and an HIS study, the commenters stated that raising the price of carbon energy will also raise costs across the economy, wh ich will ultimately flow to consumers and businesses resulting in slower economic growth, job losses, and less disposable income. The commenters stated that the IHS estimates that the rule will result in an additional $289 billion in cumulative electricity payments by consumers from 2014 through 2030; a loss of 224,000 jobs on average through 2030; more than $50 billion in average annual GDP loss through 2030, with a peak GDP loss of nearly $104 billion in 2025; and from 2014 through 2030, a cumulative redu ction of $586 billion in disposable income. The commenters stated that families will have less disposable income as they171 spend more to light and heat their homes, with middle

- income and lower

- income Americans being hit the hardest. According to the comment ers, in 2001, lower

- income households spent 16 percent of their after

- tax income on energy and in 2014, these households will spend 26 percent of their budgets on energy (before taking into account any energy assistance programs). The commenters stated tha t lower

- income families are especially vulnerable because energy costs represent a larger portion of their budgets and reduce the amount of income they can spend on food, housing, health care, and other necessities.

Commenters stated that EPA understated the Proposed Guidelines' likely disruption to the national economy, the negative impact on the reliability of the U.S. energy system, and the adverse impact to U.S. energy security. The commenters cited a study by NERA which found that implementing Option 1 would cause 45 GW of coal

- fired EGUs to retire, cause coal

- fired generation to decline 29 percent, with natural gas

- fired generation increasing 5 percent, and cause gas prices to increase 2 percent and electricity prices to increase 12 percent over the 2 017

- 2031 period. The commenters stated that state energy efficiency programs which would cost about $560 billion in present value from 2017 through 2031 and that electricity costs would increase by an average of $34 billion per year from 2017 through 2031 with the largest of the increases going to residential and commercial consumers. The commenters stated that NERA estimated that Option 1 utilizing only Building Blocks 1 and 2 would have more significant negative impacts. The commenters stated that a ful l accounting of the costs of the Proposed Guidelines would examine the multiplier effects on other sectors of the economy.

Commenters stated that the Integrated Planning Model (IPM), which was integral to modeling CSAPR, MATS, and the current proposal, does not appear to have accurately forecasted past coal retirements. The commenters stated that there will be more than 100 plants, resulting in 51.7 GW of coal retirements by 2020, and that one company alone retired nearly 6 GW of capacity from recent re gulations, making IPM models of 9.5 GW of retirements appear seriously flawed. The commenters stated that EPA projects approximately 49 GW of additional retirements, or roughly one

- fifth of all coal

- fired capacity, however, NERA recently projected that the proposed rule could retire anywhere from 45 GW of coal capacity, to more than 160 GW (65 percent of coal capacity). The commenters stated that with these additional retirements, total coal retirements from this decade could easily force approximately 100 GW of coal into retirement.

Commenters stated that the cost analysis EPA used to evaluate the proposed Clean Power Plan was inadequate as highlighted in an ERCOT 2014 report, which stated that accelerated resource mix changes will require major improvement to ERCOT's transmission system, posing significant costs not considered in EPA's Regulatory Impact Analysis. The commenters stated that the proposed rule incorporates generic and unsupported expectations of levels of integrated renewable generation and en ergy efficiency that are ambitious, unachievable, and uneconomic under traditional standards. According to the commenters, the rule will remove the current diversity in our electricity supplies, diversity which saves consumers more than $93 billion in lowe r electricity costs, according to a study by HIS Energy, and which also reduces the variability of monthly utility bills by half. The commenters stated that several studies (Energy Ventures Analysis and NERA Economic Consulting), show that the EPA plan wil l cost $366 to $479 billion over a 10

- to 15

- year period, raising electricity costs in more than 40 states, some with increases exceeding 20 percent; a study by the National Mining Association shows that if172 we experience another cold winter like the winter of 2013

- 2014, we can expect wholesale power prices to jump 27

- 55 percent across different regions, in all states, and businesses and households to pay $35 billion more for natural gas. The commenters stated that a combination of another cold winter follow ed by a warmer than usual summer would cost consumers $100 bill ion in higher electricity and natural gas prices. The commenters stated that the WPSC also uncovered significant errors in the cost of complying that had been calculated by EPA and that WSPC

c omments state that the CPP irrationally discriminates against western mine mouth EGUs as mine mouth EGUs located near Gillette, Wyoming, depended on low cost fuel to offset the expense of air cooling; measures which undermine an original cost advantage und ermine the economics of the entire plant. The commenters stated that the EPA analysis did not take into account the decline in public health and welfare that its proposed rule will cause by the increased amount of money consumers will have to pay for elect ricity and natural gas.

Commenters cited the U.S. Chamber of Commerce estimated economic impacts. Commenters opposed the proposed regulation due to the estimated economic impacts to businesses, employees and the nation as a result of requirements that wil l force the closure of coal

- fired EGUs. The commenters listed the following impacts, which have been projected to lower the US GDP by $51 billion annually through 2030 per the U.S. Chamber of Commerce:

• 224,000 jobs lost annually through 2030 by the U.S. C hamber of Commerce;

• increased cost of living via higher electricity rates, a devastating impact on lower

income families in Kentucky and other states dependent on coal

- fired electricity generation;

• increased cost for industrial and manufacturing business es upon which the economy of Kentucky is highly dependent; and

• increased volatility and uncertainty regarding future electricity costs for families and businesses due to a forced migration to highly volatile natural gas

- fired and intermittent wind and sol ar electricity generation.

Commenters cited the U.S Chamber of Commerce's estimates on increases in electricity costs ($17 billion increase annually, $289 billion by 2030), losses in disposal annual income ($3,400.00 decrease in typical household annually , $586 billion by 2030), losses in investments and GDP (over $50 billion annually), and increases in compliance costs for electricity providers ($28 billion annually, $480 billion by 2030). The commenters also cited the Heritage Foundation's estimates that aggregate GDP losses would reach $2.23 trillion by 2023. The commenters further stated that EPA's estimated $5.5 billion annual compliance cost is unrealistic. Additionally, the commenters stated that low income families and fixed

- income seniors would be disproportionately affected and that compliance costs would be passed on to consumers or shareholders in the form of reduced return on investments.

Commenters also cited the U.S. Chamber of Commerce annual and cumulative compliance costs and losses in GDP , and stated that lower income families would be disproportionately affected, jobs would be lost and energy rates would increase. The commenters also noted the discrepancy between the U.S. Chamber of Commerce and EPA compliance cost estimates.173 Commenters also cited the U.S. Chamber of Commerce annual and cumulative GDP, job loss, total disposable income and electricity cost impacts and stated that the impacts would be the greatest on the poor, the elderly, small business, and domestic manufacturing. The co mmenters then provided cost estimates of the recently repealed carbon tax in Australia

- $8.5 billion annual economic impact and $500 increased electricity costs to families

- as a comparison.

Commenters stated that EPA Seriously Underestimates the Cost of Complying with the Rule and the Impact of the Rule on Consumer Electricity and Natural Gas Prices. The commenters cited Energy Ventures Analysis (EVA) analysis of the impact of the rule that estimated wholesale electricity costs will increase by $274 bill ion, non

- power natural gas costs will increase by $80 billion, and additional capital costs for replacement power will be $53 billion. The commenters stated that these costs excluded investments in natural gas pipeline and electric transmission the rule w ill require. The commenters stated that forty

- four states will see double

- digit increases in their wholesale power prices, with 24 states facing increases close to or in excess of 20 percent. The commenters cited a NERA projection that the total cost of the proposal would be to be $366 billion to $479 billion over a 15

- year period. The NERA study cited by the commenters found that the proposal will cause double

- digit electricity rate increases in 43 states, and a 12% to 17% average increase in electricity prices Nationwide, with fourteen states facing peak year electricity price increases that could exceed 20%.

Commenters stated that EPA Seriously Underestimates the Cost of Complying with the Rule and the Impact of the Rule on Consumer Electricity and Nat ural Gas Prices. The commenters cited Energy Ventures Analysis (EVA) analysis of the impact of the rule that estimated wholesale electricity costs will increase by $274 billion, non

- power natural gas costs will increase by $80 billion, and additional capi tal costs for replacement power will be $53 billion. The commenters stated that these costs excluded investments in natural gas pipeline and electric transmission the rule will require. The commenters stated that forty

- four states will see double

- digit i ncreases in their wholesale power prices, with 24 states facing increases close to or in excess of 20 percent. The commenters cited a NERA projection that the total cost of the proposal would be to be $366 billion to $479 billion over a 15

- year period. Th e NERA study cited by the commenters found that the proposal will cause double

- digit electricity rate increases in 43 states, and a 12% to 17% average increase in electricity prices Nationwide, with fourteen states facing peak year electricity price increa ses that could exceed 20%.

Commenters stated the significant cost and compliance hurdles associated with this Proposal are frightening. Commenters cited NERA (National Economic Research Associates) projections that the Proposal will carry annual complianc e costs ranging from $41

- $73 billion and that 43 states will see double

- digit increases in the price of electricity.

Commenters cited two NERA analyses

- one assuming states could fully implement all four building blocks, and another where states could on ly implement Building Blocks 1 and 2. The commenters stated that the results indicated a 13 percent and 17 percent rate increase for Florida. The commenters stated that IPM modeling considers the proposal's impact only on individual units within the elect ric generation industry, whereas the proposal's impacts are much broader and would affect Florida's entire economy, as well as the U.S. economy. The commenters stated that it is widely accepted that a 10 percent increase in electricity prices results in a one percent reduction in GDP. The commenters stated that coal is the least expensive form of electric174 generation and would have to be replaced by higher

- cost electricity sources, and as a result, the proposal would result in higher electricity costs for F lorida, and thus have a negative impact on Florida's economy.
Commenters cited EVA estimates of a $284 billion increase in annual power and gas costs for residential, commercial and industrial customers beginning in 2020 compared to 2012, representing a 6 0% increase over current costs with annual power and gas costs further increasing each year post

- 2020. The commenters cited EVA estimates that annual residential power and gas costs would increase by $102 billion beginning in 2020 compared to 2012 and woul d continue to escalate in subsequent years. The commenters cited EVA estimates that average annual household gas and power bills will increase by $680 or 35% from 2012 to 2020 and continue to escalate year

- after

- year as EPA's proposed rule grows more strin gent. The commenters cited EVA estimates that annual average home gas heating bills will increase roughly $340 or 50% from 2012 to 2020, annual average electricity bills will increase roughly $340 or 27% response from 2012 to 2020, and that cost increases would significantly affect the U.S. industrial sector nationwide, as the total cost for electricity and natural gas would increase 92% from 2012.

Commenters stated that the cost estimates fail to reflect or capture the subsequent adverse spillover impact s of higher electricity rates on our nation's overall economic activity. The commenters cited an analysis by NERA Economic Consulting indicating that average U.S. electricity prices would increase by 12% per year and the total costs of the rule could be be tween $366 billion and $479 billion over a 15

- year timeframe

. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy consumers. The commenters stated that higher energy prices disproportiona tely harm low

- income and middle

- income families. The commenters stated that the Proposed Rule would result in a direct loss of 52,000 jobs in the electric utility, mining and rail sectors due to plant closures. The commenters stated that an additional 100, 000 indirect jobs are at risk for loss in communities affected by the closures, and that job losses would be concentrated in, "relatively poor, rural areas that are least able to afford the loss of high

- wage skilled jobs."

Response 1.c. : A number of comme nters stated that EPA’s cost estimates and the economic impacts of the CPP are understated. These commenters referenced studies conducted by HIS, NERA, EVA, the Chamber of Commerce

, and other organizations. The EPA believes the studies referenced incorpora te modeling assumptions that differ greatly from those used by EPA leading to erroneous conclusions. See responses to section 8.6, comment 5 of this Response to Comment document for response s to these referenced studies. The EPA believes that the modeling and analys e s conducted by the EPA fully analyze the cost and economic impacts of the CPP and is a reasonable representation of the actions states make take in the design of their implementation plans. See section V of the preamble, the RIA and the GHG Mit igation Measures Technical Support Document for more information about the methods and modeling assumptions used by EPA to develop the cost and economic impacts of the CPP.

1.d. Commenters disagreed with EPA IPM modeling and modeling assumptions.175 American Action Forum: Commenters cited an American Action Forum estimate that if the new EPA regulations go into effect, Americans could see their electric bills increase annually by more than 10 percent

- $150 for the average consumer

- by the end of the decade.

Commenters stated that the proposal overestimates what is technically feasible, and/or entails costs significantly higher than those projected by EPA. The commenters stated that if finalized in its current form, the proposal would substantially increase the rates Wyoming consumers, including WIEC's members, pay for their electricity, and could significantly impact the reliability of the electrical service they receive.

Commenters stated that the Proposed Rule relies on the faulty assumption that all stat es can order the "re

- dispatch" of natural gas units, which would in practice fundamentally transform the economic underpinnings of competitive electricity markets from a least

- cost "economic dispatch" model to an "environmental dispatch" model and greatly compromise the integrity of those markets.

Commenters stated that EPA has omitted the lost employment costs from retired coal and drastically underestimated the green energy investment needed to create 78,800 jobs by 2020. The commenters stated that if EP A's employment projections of 78,800 are true, the cost of installing zero carbon energy will cost the economy $30.7 billion in 2020, a figure never mentioned in the RIA.

Commenters stated that the IPM model improperly assumes that compliance actions rela ted to existing generating assets and construction of new generating assets could be deployed in 2016 and does not consider the time necessary to put in place accompanying regulatory, legislative and compliance decisions. The commenters stated that virtua lly all of the reductions in CO2 emissions from affected EGUs come from reduced utilization of coal

- fired EGUs and that EPA must determine the diminution in asset value to the owners of those existing sources, and the local and regional economic disruption and unemployment that would result from the proposal.

Commenters stated that it is unclear if the IPM model incorporates stranded costs or ancillary transmission and other investment costs into its projections of electricity rates impacts. The
commenters stated that ratepayers would still be required to pay the costs associated with retired units in addition to the costs of any other measures that would have to be deployed in response to the rule.

Commenters asked that the EPA "should not assume in its m odeling that any new NGCCs can be built earlier than June 2023 to June 2025, six years after state plans are approved." The commenters noted the following:

• the commenters estimated approximately six years to bring an NGCC unit online

• the commenters noted that installation of new generation would need to occur after state plans are finalized

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvania, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the tot al national electric176 generation as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the state had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stat ed that West Virginia's economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to surrounding states. The commenters stated that the wholesale reduction of the coal market, along with the costs asso ciated with implementing the Plan, will result in wide

- ranging harm to state and local economies, triggering job loss, shrinking tax bases, a decline in manufacturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwest Independent System Operator, a regional power grid operator, estimated that its 20

- year discounted compliance cost of the rule will be $55

- $83 billion. The commenters stated that some national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate increases in 43 states, with 14 states facing peak year electricity price increases that could exceed 20%. The commenters cited other estimates that wholesale electricity costs will in crease by $274 billion; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion.

Commenters stated that for a number of years, numerous states and organizations have expressed

concerns r egarding U.S. EPA's IPM modeling and concerns of its accuracy and appropriateness for developing important policy and regulatory programs. The commenters stated that the concerns identified below clearly identify inherent problems with U.S. EPA's over reli ance on IPM and EIA which provides a false sense of security. The commenters strongly advocated that U.S. EPA should do its due diligence by consulting appropriate federal agencies and using established modeling and analysis mechanisms.

The commenters sta ted that they, working jointly with other states through the Lake Michigan Air Directors Consortium (LADCO) have expressed these concerns in the past. The commenters stated that on June 30th 2014, LADCO submitted comments regarding U.S. EPA's 2018 Modeling Platform and use of IPM. The commenters stated that the same concerns seem to resurface. The commenters stated that concerns regarding the economic optimization of the IPM model specifically with respect to the power system, which is not completely govern ed by economics. The commenters stated that reliability, emissions credit trading, and corporate/organizational inertia can all influence where companies select to generate power. The commenters stated that the juxtaposition of these two ideas are best man ifested and illustrated in the handling of a single large oil burning unit in Virginia called Possum Point. The commenters noted that on peak days Possum Point has significant generation, also the unit runs during the spring maintenance periods of the nucl ear plants in Virginia. The commenters noted that this example illustrates the inherent problem with using a national model such as IPM that cannot take into account the potential state and local reliability issues that arise.

The commenters expressed seri ous reservations concerning the ability of the IPM to accurately predict and demonstrate grid reliability under the proposed rule. The commenters understood that the IPM model is a deterministic linear programming model, which, for specified periods of tim e, determines the least

- cost method of meeting energy and peak demand requirements. The commenters noted that IPM is categorically not a dispatch model, and is limited in multiple ways in its reliability assessment capabilities. The commenters noted that a mong these limitations are seasonal only dispatch, lack of the necessary finely

- detailed transmission and distribution information required to accurately model intra

- regional dispatch, and the treatment of generating177 units as aggregates (as opposed to indi vidual, geographically located entities within the transmission grid), which fails to represent congestion at the local geographic level.

The commenters stated that furthermore, IPM inadequately represents solar, wind, and other forms of intermittent rene wable generation which are reliant on favorable meteorological conditions; IPM does not account for meteorology through either past observed weather data or random meteorological data generation. The commenters stated that accurate and reliable transmissio n modeling of the type conducted routinely by RTOs and other entities concerned with grid reliability can only be accomplished with sophisticated dispatch models. The commenters stated that models of this type are nonlinear, rely on historical operating da ta to achieve optimal dispatch, correctly treat generating units as specific, geographically located entities, and are capable of identifying congestion at the proper level of detail. The commenters contended that absent independent, transparent and open d ispatch modeling, implementing the proper dispatch modeling tools, reliability under the proposed rule has not been adequately demonstrated by U.S. EPA via IPM modeling results. The commenters stated that given the far

reaching impacts of the proposed rule and the grave consequences of grid reliability issues, if U.S. EPA insists on moving forward with this proposal, the commenters urged U.S. EPA to engage in outreach with the various RTOs, FERC, NERC, and other entities capable of adequately modeling dispa tch scenarios under the proposed rule. The commenters believed that a fully optimized economics based projection tool is an inappropriate mechanism for building future policy frameworks or setting policy budgets.

The commenters stated that the U.S. EPA re lied on results generated by IPM in the development of the proposal and the assessment of the economic, reliability, and technical feasibility. The commenters expressed serious concerns with this approach, based on a number of assumptions and results that do not seem technically sound, feasible, or reasonable. The commenters conducted an analysis of the limited parsed IPM results made available on the docket as well as those IPM scenarios for which parsed files were not made available, analyzing specificall y Option 1, State

- specific compliance policy case, the Regional Plan scenario, State Plan Blocks 1 and 2 only, and the base case scenario.

The commenters stated that their primary concern is that a decrease of between 4 and 7 million tons of CO 2 (dependent upon which scenario is in question) was predicted between the base and policy cases in 2025. Overall, the commenters noted that IPM projects a ~26% decrease in CO 2 tonnage from 2005 levels in Ohio. The commenters stated that this will be extremely challen ging and practically impossible for several reasons. The commenters noted that as a deregulated state, implementation of the proposal would likely involve an extensive reconstruction of the power grid and electric distribution both within Ohio and across t he entire PJM reliability region. The commenters understood that the creation of a plan in accordance with the proposal would be an intensive, complex, and costly process for many states. The commenters stated that it found it difficult to reconcile the co nsiderable expenditure of resources and effort that would be necessary under the proposal to realize a net benefit of 4 to 7 million tons of CO2, relative to the base case scenario by 2025, especially because they expect to already achieve significant redu ctions absent this proposal.

The commenters expressed significant concerns on the projected capacities at new and existing renewable resources. The commenters stated that comparing IPM projections for hydro to178 historical eGRID data, the commenters has iden tified that the capacity factors projected by IPM for O'Shaughnessy and Hamilton Hydro plants are approximately 5 times their historical values under the 2025 state compliance plan. The commenters stated that such heavy utilization at these units is unlike ly given historical precedence and no announced plans for expansion. The commenters noted that IPM projects 3,001 MW of new wind capacity in 2025 under the state compliance option, and 4,955 MW under the regional compliance plan. The commenters stated that this is not realistic and in addition, these new units are projected to operate between 30 and 36% capacity, significantly greater than existing wind turbines in the state, which typically operate at approximately 20 to 25% capacity. The commenters stated that these projected capacity factors also reveal that very little emphasis was placed on the difference between technologies capable of supplying base

- load power and those units which supply electricity only when available to do so.

Commenters stated th at EPA has yet to make available all the documentation the public needs to assess whether the proposed rule is reasonable, including 21 of the 25 IPM modeling runs EPA relies on to argue that the Building Blocks are achievable.

The commenters stated that review of the limited modeling results leaves many questions, for example, regarding the appropriateness of how energy efficiency is represented in the model (both characteristics and cost), the appropriateness of modeled transmission investment, and the
t reatment of any "remaining plant balance" associated with modeled retiring plants. The commenters stated that it is not clear from the limited modeling results presented, how the Building Blocks are integrated into the cases.

The commenters stated that IPM 's assumption that a 100% load factor (full reductions in all hours of each year) for EE resources is unreasonable. For example, the commenters stated that an energy efficiency program involving residential light bulbs only generated reductions when the li ghts are normally on, likely something far less than 100% of the time. The commenters stated or, consider a residential refrigerator EE program that results in savings only when the old refrigerator was normally running (i.e. more efficient operation, fewe r hours of each day) again, far less than 100% of the time. The commenters stated that examples similarly continue in the industrial sector with HVAC programs with less than 100% load factor and even industrial lighting and/or motors which would only appro ach 100% load factor results in the most efficient 24/7 manufacturing facilities.

The commenters stated that it is not clear from the limited results and documentation provided by EPA whether the assumed $44B cost for EE is consistent with "one for one" pr ograms with less than a 100% load factor (in which case the modeling assumptions are not appropriate) or alternately, the $44B cost assumption may be understating the spend necessary to accomplish this magnitude of energy reductions.

Commenters stated tha t systematic biases and major omissions in EPA's limited evaluation produced a cost

- benefit analysis divorced from reality. The commenters stated that EPA's RIA fails to assess whether the proposed rule will achieve meaningful benefits and, more importantl y, whether the benefits are with the heavy cost. The commenters stated that the EPA has failed to adequately consider the impacts of the CPP. The commenters stated that without public access to all underlying assumptions, modeling mechanisms, and results, it is impossible to know whether179 the Agency has connected core deficiencies that have resulted in the gross underestimation of impacts in previous rules.

Commenters stated that EPA must conduct a thorough analysis on the costs and direct domestic benefits of any final guidelines. The rule as proposed simply double counts co

- benefits of emissions reductions from domestic power plants and cited only immeasurable global climate

related benefit. The commenters said that the EPA should also work with the Depart ment of Energy to analyze any proposed impacts on federal and private sector investment in clean coal technology and the resulting impacts on GHG emissions. (Please see section 8.7.2, comment 3, for EPA’s response to the comments on the scope of the climat e benefits, including the justification and use analysis of global estimates of the social cost of carbon.)

Response 1.d. : Commenters asserted the energy markets including gas, coal and electricity are incorrectly modeled by EPA. Commenters discussed concerns about the Integrated Planning Model (IPM) modeling completed to support the CPP. Some commenters disagreed with the assumptions used in the modeling

, while others express concern about the ability of the model to adequately reflect factors such as reliability, infrastructure needs, and various aspects of electricity generation. Some commenters also contend that documentation of IPM is inadequate.

EPA disagrees with these comments. EPA used the Integrated Planning Model (IPM) version 5.15 to estima te the illustrative costs, emission reductions

, and economic impacts of the CPP. IPM is a multi

- regional, dynamic, deterministic linear programming model of the continental U.S. electric power sector. It provides forecasts of least

- cost capacity expansion, electricity dispatch, and emission control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. EPA has used IPM for over two decades to better understand power sector behavior under future busines s

- as

- usual (i.e. baseline) conditions and evaluate the economic and emission impacts of prospective environmental policies. The model is designed to reflect electricity markets as accurately as possible. EPA uses the best available information from utiliti es, industry experts, gas and coal market experts, financial institutions, and government statistics as the basis for the detailed power sector modeling in IPM. The model documentation provides additional information on the assumptions discussed here as

we ll as all other model assumptions and inputs. 3 EPA used IPM to project likely future electricity market conditions with and without the rule. The level of energy efficiency

- driven reductions in electricity demand, and their associated costs, are reported i n chapter 3 of the RIA. Within the IPM analysis reported in the RIA, cost impacts on the electric markets of needed additional gas pipeline infrastructure, transmission system upgrades, and other infrastructure investments as well as capital costs of new c apacity, and other costs associated with retirement of generating units are considered. Additional demand

- side energy efficiency measures that may be adopted in response to the regulation, and the resulting changes to future demand projections, are also ac counted for in the illustrative compliance scenarios. The costs of energy efficiency programs are also incorporated into the illustrative cost estimates of the emission guidelines discussed in the RIA . See the Resource Adequacy and Reliability technical su pport document for

3 Detailed information and documentation of EPA’s Base Case using IPM (v5.15), including all the underlying assumptions, data sources, and architecture par ameters can be found on EPA’s website at: http://www.epa.gov/airmarkets/powersectormodeling.html

.180 additional analysis and discussion of the reliability analysis conducted by EPA for the CPP. Additionally, see IPM documentation available at: http://www.epa.gov/airmarkets/powersectormodeling.html See section V of the preamble for a di scussion of costs of the final guidelines.

Comment 2: The impact of price changes in energy markets are severe for consumers.

Commenters discussed impacts to American refineries, manufacturing, other businesses and hardworking American consumers such as less affordable and less reliable energy, loss of jobs, and elimination of fuel diversity. The commenters stated that the proposed EPA rule ignores the successful example of our free market and guarantees adverse consequences for nearly every consumer and business in the U.S. The commenters further stated that the proposed rule threatens our industry's international competitiveness due to higher energy costs.

Commenters noted financial impact of previous EPA decisions and the current investments made by the utilities to reduce carbon emissions that are already being paid for by New Mexicans as part of their electric rates. The commenters stated that ratepayers have seen rates increase with new renewable sources coming on line as well as conversions from coal to other sources used for power production; and in addition, there are other significant increases pending with the final implementation of plans at SJGS and FCPP.

Commenters stated that the high cost of new carbon capture technology will mean significan tly higher electric bills in Alaska where monthly energy bills can be as high as or higher than a homeowner's mortgage payment.

Commenters stated that utility ratepayers will bear the burden of the Proposed Rule and consequently, it will have an inordinat e financial impact on utility customers in Central Florida.

Commenters cited NERA estimates that if all four Building Blocks were implemented, Colorado would experience a 17 percent rate increase, Nebraska would experience a 15 percent rate increase, New Mexico would experience a 16 percent rate increase, and Wyoming would experience a 22 percent rate increase. The commenters cited NERA estimates that if only Building Blocks 1 and 2 were implemented, electricity prices would increase by 27 percent in Color ado, 26 percent in Nebraska, 16 percent in New Mexico, and 42 percent in Wyoming. The commenters stated that EPA's estimates of the increases in the price of retail electricity have been understated.

Commenters stated that raising costs on electricity w ould unfairly hurt those people that cannot utilize other fuels, such as natural gas, to heat their homes, or run their pumps.

Commenters stated the Plan callously disregards the impact of increased energy costs that have a domino impact on every step in the supply chain resulting increased costs of our goods and services, reduced competiveness and job losses.

Commenters cited a study by the Heritage Foundation that EPA's energy regulations would cost hundreds of thousands of jobs and cause a significant decline in personal income while having a181 minimal impact on global warming. The commenters stated that these regulations would reduce aggregate gross domestic product by more than $2.5 trillion between now and 2030, and employment would track nearly 300,00 0 jobs below the no

- carbon

- regulation baseline in an average year, with some years seeing an employment deficit of more than 1 million jobs. The commenters cited a NERA study estimating that the costs to comply with EPA's proposed plan could total $366 bi llion, or more and finds that 43 states will have double

- digit electricity price increases.

Commenters stated that the CPP would have the effect of significantly reducing power generation from coal

- fired EGUs, which would immediately threaten the supply o f power available for distribution to consumers and force the retirement of hundreds of power plants. The commenters stated that hundreds of thousands of coal miners and supporting employees would face layoffs due to the decrease in coal demand. The commen ters stated that due to the significance and size of the coal industry, enactment of the CPP would push the national economy along a similar trajectory as the coal industry itself. The commenters stated that by 2030, some 114 GW of existing capacity will b e removed from the grid due to closures of coal

fired EGUs. The commenters stated that the Plan is projected to result in a peak loss of 442,000 jobs occurring in 2022, amounting to a decline of nearly $104 billion to the US GDP. The commenters stated tha t most analysts predict that the cost of electricity will increase significantly, amounting to an aggregate increase of nearly $300 billion by 2030

. The commenters stated that in cases of power shortages, which are a distinct possibility due to increased r eliance on redispatch to NGCC, price spikes in excess of 10 times the average rate are likely. The commenters stated that costs are particularly significant for lower

- income households, which the CPP is expected to disproportionately impact

.

Commenters sta ted that under the CPP

, leakage is likely to occur on a national level and also on a state level, and that New York and New York facilities will be at a significant disadvantage. The commenters stated that energy

- intensive trade

- exposed (EITE) industries r equire a level playing field to prevent GHG leakage. The commenters stated that total industrial sector electricity costs would rise from about $65.1 billion in 2013 to 165.6 billion in 2030, a 154 percent increase.

Commenters quoted SWEPCO that because their territory is perpetually disadvantaged, they expect continued difficulty motivating customers to pay for more expensive energy efficiency improvements such as HVAC upgrades and weatherization measures. The commen ters estimated that a residential customer will see average charges for energy efficiency rise to nearly $9.00 per month, possibly higher for some customers, far more than the average monthly cost of approximately $0.80 seen in 2013. The commenters stated that rural, noncontiguous areas and sparsely populated areas of Texas have encountered difficulty attracting energy efficiency service providers. The commenters stated that residential customers in El Paso's territory rely very little on refrigerated air conditioning and consume far less energy than the state average, which has contributed to low participation in that sector. The commenters stated that much of the burden of achieving the EPAs target cumulative savings may fall to the larger utilities servi ng densely populated areas that have more potential for growth in their energy efficiency portfolios. The commenters stated the proposal that would introduce an important fairness issue that customers in more densely populated areas should have to pay mor e for energy efficiency182 programs than customers living outside of these areas, because of the aggressive requirements of Block 4.

Commenters stated that Terre Haute has several manufacturing businesses that rely on low cost energy to keep costs affordable . The commenters stated that if the proposed rule is approved, many coal

- fired plants will be forced to shut down and switch to natural

- gas generation, costing ratepayers who ultimately pay the price for new power plants. The commenters stated that gas pri ces are volatile. The commenters stated that seniors and those living on fixed incomes will be hit the hardest and that wholesale electricity prices are projected to increase between 27 and 55 percent over the next two years as more coal

- fired plants shut down due to other EPA rules.

Commenters stated that the estimated electricity price increase to ratepayers is expected to be approximately 30 percent by 2025, and asked that EPA consider the negative consequences of power price increases that might resul t from the CPP.

Commenters stated that the CPP is likely to increase substantially the amount Americans pay for electricity.

Commenters stated that should the EPA proceed with the proposed Clean Power Plan it expects that Kansas ratepayers will face a f uture of exorbitantly high electricity costs and unreliable electric service.
Commenters stated that residential electric bills will increase almost $270 a year, and some large industrial customers will see an increase of over $3 million a year if a propo sal by the Environmental Protection Agency to limit carbon dioxide emissions is adopted.

Commenters stated that the CPP will significantly increase the cost of electricity to all consumers due to the fact that it requires the use of less economically effi cient forms of generation and that those costs will ultimately be passed through to the consumer.

Commenters cited EVA estimates that the costs of implementing the proposed rule will increase North Carolina wholesale power rates by 13.9%. The commenters s tated that there is never a good time for US manufacturers to be faced with significantly higher electric power rates.

Commenters stated that the cost of electricity would rise because customers would have to pay not only the cost of the imported energy, but the additional service fees imposed for delivering energy from distant locations as well.

Commenters stated that EPA's assessment that customer bills will actually decrease under the proposed program cannot be correct if the overall cost to America's utility industry exceeds $10 billion per year. The commenters stated that rate impacts of this magnitude will have their severest impacts on the less fortunate among residential customers who are least able to absorb the increases or to change their consu mption patterns through conservation. The commenters stated that if utility costs go up, then utility bills will go up as well

-- an outcome that will affect all customers.

Commenters stated concern regarding the negative impact to ratepayers of having to pay higher rates associated with the utilities' needs to recover existing costs and the additional costs that183 they will incur to comply; the negative impact to ratepayers of having to pay higher rates associated with utilities requiring higher returns to compensate them for the additional risks that the utilities will face; and the negative impact to ratepayers associated with paying higher rates for any responsibility they may experience due to being made responsible for unrecovered costs if plants are sh uttered or if plant output is reduced.

Commenters expressed concern that the South Carolina goal of 772 lbs CO2/MWh cannot be achieved solely through renewable generation and EE. The commenters predicted that if under

construction nuclear does not count t oward compliance, despite the costs of overcoming current capacity constraints, electricity providers will turn to natural gas

- fired generation as the means of satisfying their obligation to serve and to meet the emission goal. The commenters stated that t he capital investments required to plan, site, permit, and build new interstate natural gas pipeline infrastructure will likely displace capital available for renewables and EE, and utilities would pursue the economies of scale of natural gas to the detrim ent of the other Building Blocks.
Commenters stated that the SPP region has spent in excess of $8 billion on transmission investments, of which Kansas electric customers are paying for approximately 20 percent, and that these investments may not have been needed based on where SPP's projected new 10,100 MWs of generation are located, but that Kansas' ratepayers will still be required to pay for these investments regardless of whether they are needed in the future. The commenters stated that the KCC can add ress cross

- subsidy issues within the context of setting rates for a single utility but the state

- wide emissions guideline will create cross

- subsidy issues between the customers of separate utilities. The commenters stated that the Clean Power Plan identifi es the specific utilities who own the affected EGUs, but does not address how a state should determine which utilities will build new NGCC or renewable energy, nor does the plan identify what DSM energy efficiency programs should be used. The commenters st ated that the KCC does not have statutory authority to allocate the costs associated with the Clean Power Plan to all ratepayers in Kansas because a large number of utilities are not rate

- regulated by the KCC. The commenters stated that if a non

- jurisdicti onal utility does not agree to a compliance plan, the KCC would be forced to require jurisdictional utilities to take additional measures to meet the overall emissions guideline and subsidize the costs of compliance for non

- jurisdictional ratepayers. The

c ommenters stated that the EPA has created a high likelihood that cross

- subsidization will occur between ratepayers of the utilities in the state and that this concern carries over to the EPA's proposed multi

- state option. The commenters stated that the av erage cost for Kansas consumers will still increase as other states move to a more expensive generation mix and that this subsidy will be exacerbated because Kansas' coal units have been retrofitted with pollution controls and may remain in service for an extended period. The commenters stated that the EPA does not define how a determination would be made as to which states should be held accountable should the multi

- state plan fail to achieve the region's target emission rate. The commenters stated that th e CPP, creates significant reliability issues within Kansas and the SPP region and that a market

- based approach will interject too much uncertainty and risk into the planning process used to determine new generation and transmission projects. The commenter s stated that Cap and Trade programs are subject to changes in the market structure and that it does not believe that a market

- based approach

- such as a Cap and Trade Program

- is an appropriate mechanism to achieve the significant emission reductions nec essary under the CPP, as proposed. The commenters stated that it is also possible that the market price of emission limits could escalate to a high enough level that certain EGUs would become uneconomic overnight, and that this184 situation could lead to the need for new generation and transmission investment, stranded costs, and reliability issues.

Commenters stated that the system operator generally utilizes a bid

- based merit order to dispatch generation

- that is, supply resources such as power plants subm it economic offers which the system operator uses to commit and dispatch particular resources from least cost to more expensive in sufficient quantities to meet electricity demand, subject to out of merit adjustments for reliability based on system and sec urity constraints. The commenters stated that RTO/ISO footprints often cross but do not always comport with state boundaries. The commenters stated that in some cases one state may have two RTOs/ISOs located within it (e.g., Illinois), only parts of some s tates may be in a RTO/ISO (e.g. Kentucky and North Carolina), and even what appear to be single state RTOs/ISOs (e.g., California and New York ISOs) rely on exports and imports of power which flow across state lines. The commenters stated that each state w ill be assigned varying emissions targets notwithstanding the substantial interstate nature of regional wholesale power markets, and unless regional coordination among states is encouraged and facilitated with enough time for implementation, there may be u nintended market consequences and potentially costly inefficient market incentives with respect to how power plants are dispatched. The commenters stated that facilitating regional cooperation will allow for the continued co

optimization of cost and reliab ility that is central to the organized markets that have served customers well.

Commenters stated that use of a state

- wide emissions guideline creates cross

- subsidy issues between Kansas ratepayers, and the state

- wide emissions guideline, in conjunction w ith the multi

- state option, creates cross

- subsidy issues between states.

Commenters stated that EPA has not fully considered the complexity involved in this type of multi

- state coordination, which has the potential to create confusion and uncertainty for BPA customers and the potential for exposure to higher costs.

Commenters stated that one of the many benefits of hydropower imports which our U.S. utility customers and their rate payers’ value is long

- term price certainty. The commenters stated that util ities see value in purchasing hydroelectricity from Manitoba Hydro through long

- term contracts as a way to limit their exposure to fluctuating natural gas prices and potential costs associated with changes in regulatory requirements tied to emissions.

Com menters cited findings from a national survey that a majority believe the United States cannot afford new costs and potential job losses resulting from the EPA regulations; nearly half of those polled say they are not willing to pay a single dollar more in their energy bill to accommodate the new EPA regulations; and 47 percent oppose the regulations

. The commenters stated that these findings are mirrored on a state level in Arkansas, and the Proposed Rule is dependent in many instances on changes in state law and state regulations, and elected state and local officials will not be willing to enact legislation or approve regulations that result in such far

- reaching and expensive effects on their constituents.

Commenters stated that the draft rule summarily discards billions of dollars in investment Georgians have made in state

- of

- the

- art emissions controls on coal

- fired units, and EPA’s proposal assumes that Georgia will retire another 3900 megawatts of coal

- fired generation in185 response to this rule, thereby stranding the investment in those generating units, including billions of dollars' worth of environmental controls.

Commenters stated that the premature shutdown of existing coal plants with a remaining economic life will likely cause higher electric rat es and increased costs for the nation's electricity consumers than EPA has projected. The commenters stated that the net present value cost impacts range from about $7 billion to almost $430 billion, with associated rate increases of 5.47 to 55.4 percent.

Commenters stated that EPA must consider the economic consequences of stranded assets and tailor the Proposed Rule to minimize these impacts. The commenters stated that Building Block 2's emission reductions requirements assume increased NGCC usage and ma ssive retirement of existing coal and oil/gas steam generation, and that these stranded costs would be borne either by the plants' owners or by ratepayers where the stranded assets have yet to be fully amortized. The commenters stated that the proposed rul e would place an unreasonable burden on electric consumers who would be forced to cover the cost of prematurely retiring these units plus the cost of the new NGCC units needed to replace them.

Commenters stated that coal job losses and rising electricity prices pose a threat to Kentucky consumers and our essential industrial manufacturing economy. The commenters stated that it is irresponsible for EPA to suggest that a $2 billion loss to our state gross domestic product coupled with a ten percent increase in electricity costs is "modest". The commenters stated that the proposed rule would strand another $4.5 billion previously invested in existing assets to achieve compliance with the existing mercury and air toxins standard. The commenters stated that EPA must consider reasonable safety net provisions.

Commenters stated that the IPM model improperly assumes that compliance actions related to existing generating assets and construction of new generating assets could be deployed in 2016 and does not conside r the time necessary to put in place accompanying regulatory, legislative and compliance decisions. The commenters stated that virtually all of the reductions in CO2 emissions from affected EGUs come from reduced utilization of coal

- fired EGUs and that EP A must determine the diminution in asset value to the owners of those existing sources, and the local and regional economic disruption and unemployment that would result from the proposal.

Commenters stated that EPA failed to takes into account the costs of stranded investment and cited examples from Arizona, Florida, Mississippi and Kansas. The commenters stated that EPA estimated that MATS alone would drive the installation of 20 GW of dry scrubbers, 44 GW of direct sorbent injection, 102 GW of fabric fi lters, 63 GW of scrubber upgrades, and 34 GW of electrostatic precipitator upgrades, with projected capital and operating costs of these installations of $9.4 billion annually. The commenters stated that with EPA now predicting an additional 49 GW of retir ements in addition to the MATS

- caused retirements, a great deal of this investment is likely to be stranded. The commenters stated that it is consistent with Section 111(d)(1)(B), for states to determine that sources that have extended their useful lives b y installing long

- lived and expensive pollution control systems should not be required to prematurely retire and leave electric ratepayers with tens or hundreds of millions of dollars in unamortized investments. The commenters stated that EPA does not expl ain whether, if a state goal would be made less stringent because of stranded investment, the state would be required to186 make additional and compensating GHG reductions either in 2020 or later that decade. The commenters stated that EPA should permit state s to exempt sources from EPA's requirements to the extent the states determine that compliance would create stranded investment.

Commenters stated that EPA's regulations on coal

- fired plants have forced and will continue to force closures of generation fa cilities that have already been retrofitted with pollution controls. The commenters stated that customers would see a rate shock if these plants shutdown or are underutilized because they will continue to pay for the stranded costs of the environmental inv estments in addition to new investments associated with the replacement resources required from plant closures.

Commenters stated that Nebraska is the only state whose power system is entirely publicly owned and managed. The commenters stated that its pub lic power boards have a statutory duty to provide the lowest possible cost energy and that the implementation of the Clean Power Plan would critical investments at risk.

Commenters stated that some coal plants have been retrofitted with billions of dollar s' worth of emission equipment stemming from other EPA rules, and it is socially and economically suboptimal to close a majority of these plants before their useful lifetime. Commenters stated that if, as predicted, EPA's proposal forces coalfired units to completely shut down before their useful lives have run, the Florida utilities' enormous, undepreciated investment in these units will be rendered worthless, and will leave the utilities with "stranded assets", with significant remaining economic value an d outstanding indebtedness. The commenters stated that these Florida utilities arguably will be legally entitled to recover the costs to be incurred under this proposed government regulation. The commenters stated that the proposal would have a devastating economic impact on several Florida utilities, forcing them to completely and finally shut down several coal

- fired units, and stripping these Florida utilities of all economically

- viable use of their property at the affected power plants. The commenters st ated that when the government encouraged the use of coal and prohibited the use of oil and natural gas, these Florida utilities reasonably expected that the coal

- fired generating units would not be regulated out of the market. The commenters stated that i f EPA finalizes the emission guidelines as proposed, it effectively amounts to a regulatory taking of these and other coal

- fired power plants, and Florida utilities would be entitled to recover the hundreds of millions of dollars of the remaining value of these units as a result of the total loss of their remaining economic value. The commenters stated that EPA's economic impact analysis fails to consider both the real costs from forced closure of existing, useful power plants that will result directly from its proposal and how those costs must be recovered following the adoption of any final rule.

Commenters stated that EPA has underestimated the proposal's impact on electricity prices. The commenters stated that the proposal would accelerate the retireme nt schedule and increase the costs associated with the transition from existing coal

- fired EGU capacity to other sources of electricity. The commenters stated that there will be a significant cost in the form of stranded assets that will result in signific ant economic harm by premature retirement. The commenters stated that the proposal would change the market dispatch of generating units by reducing the availability of the most economic generating resources. The commenters cited a study by Energy Ventures Analysis Inc. that on a percentage basis, the U.S. industrial sector would be affected187 most severely with a 64 to 92% increase in electricity and gas, affecting energy intensive industries in the U.S. such as aluminum, steel and chemicals manufacturing.

C ommenters stated that the compliance cliff imposed by the interim compliance period will likely have many adverse impacts, including creating substantial stranded investment from the premature shutdown of many existing coal

- fired EGUs that could be forced to stop operating by 2020 given the front

- loading of Building Blocks 1 and 2 and the steep reduction in the CO2 emissions required at the start of the interim compliance program. The commenters stated that that consumers would have to pay for the same elec tricity generating stations twice, first the billions of dollars they are already paying or will be paying for the pollution controls that were previously installed or are being installed, and second for the replacement capacity that will be required. The commenters stated that this can be avoided by eliminating the interim compliance period.

Commenters stated that the four BBs that are the basis of the mandatory standards for the states assure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt , which will cause major stranded investment costs to consumers. The commenters stated that these stranded asset costs were not included in the national cost assessment developed by EPA, and that EPA also failed to assess the costs of building new gas pipe lines and transmission lines that would be required by the closure of so many coal plants. The commenters stated that the approach threatens continuing electric reliability.

Commenters stated that reduced demand for electricity does not translate into red uced electricity prices. The commenters stated that the proposed rule will shift generation away from Ohio's well

- controlled and economical coal

- fired fleet to more expensive generating technologies, and force the dispatch of electricity away from economic models to environmental ones. The commenters stated that in response to the Mercury and Air Toxics standards, the remaining coal

fired fleet in Ohio will be well controlled, efficient, and economic, and many plants have installed environmental controls in the last decade at substantial costs. The commenters stated that there is potential under the proposed rule that these units will become uneconomical, and thus represent significant "stranded costs" to Ohio rate

- payers.

Commenters stated that EPA did not consider remaining useful life as required under the CAA, nor does its proposal allow the states to consider it. The commenters stated that Arizona has virtually no flexibility.

Commenters stated that EPA's proposed guidance will require coal

- fired power plants, currently installing hundreds of millions of dollars of air pollution control equipment (to comply with the federal Regional Haze Program and Mercury and Air Toxics standard) to shutdown early and strand invested assets. The commenters stated that utility companies will be forced to recover the cost of abandoned air pollution control devices while at the same time recovering replacement generation costs from customers. The commenters stated that EPA should abandon state goals and allows states to b ase the best system of emission reduction on the affected electric generating units within their jurisdiction.188 Commenters stated that if adopted as a stand

- alone standard of performance, the application of BB2 as proposed would require the retirement of A rizona's entire coal fleet, which makes up approximately 36 percent of Arizona's generation mix, by 2020. The commenters stated that the retirement of the entire fleet by 2020 would result in unreasonable costs in the form of enormous stranded investments and rate payers, would end up paying twice for the same generation: once to retire the debt on the prematurely retired assets and again to fund replacement generation.

Commenters stated that utilities that would be required to prematurely close viable coa l plants with years of remaining operating life, and given the limited time period for re

- dispatch, would be forced to purchase energy (that may not be available) from other utilities. The commenters stated that their consumers would lose the investment in the capital intensive coal plants and, at the same time, be forced to pay for new transmission lines and pipelines to other utilities to buy electricity from gas generation plants they do not own while their own units sit idle. The commenters stated that the four building blocks that are the basis of the mandatory standards for the states assure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt, including debt from recently installed emissions controls to meet Maximum Achievable Technology Standards (MATS) and other environmental requirements, which will cause major stranded investment costs to consumers. The commenters stated that these stranded asset cos ts were not included in the national cost assessment developed by EPA, and that EPA also failed to assess the costs of building new gas pipelines and transmission lines that would be required by the closure of so many coal plants.

Commenters stated that t he electric bill savings projected by EPA in the Proposed Rule may not materialize and that EPA's analysis is devoid of any analysis with respect to the cost of early retirement of used and useful plant that has not been fully paid for through utility rate s. The commenters stated that if the Final Rule forces premature retirement of facilities in the service territories of one of the state's three IOUs, North Carolina ratepayers will likely bear some or all of these costs.

Commenters stated that EPA failed to appropriately account for the more than 70,000 MW of facilities that have already been retired since the 2012 baseline or may be scheduled to retire during the interim compliance period or shortly thereafter. The commenters stated that States must eith er identify other emission reductions

- for example by accelerating implementation of RPS or EERS programs

- or require costly over

- compliance later in the interim period which will ultimately prove unnecessary to achieve the final emission reduction targe ts. The commenters stated that it is unreasonable to suggest that all the coal

- fired EGUs that EPA projects will retire by 2030 will have reached the end of their useful lives and would have been retired even in the absence of this rulemaking, and if State s were permitted to consider the remaining useful life of existing sources when setting standards of performance, they may impose less stringent standards that would avoid the premature closure of coal

- fired EGUs. The commenters stated that many coal

- fired EGUs that would be forced to retire under the proposal would be unable to recoup their capital investments and there will remain a serious question of who should be responsible for bearing the economic burden of the stranded assets that will result from t he premature closure of these coal

- fired EGUs.189 Commenters stated that Arizona has a relatively new coal

- fired fleet and several of the coal

- fired units recently have been equipped with expensive pollution control technology. The commenters stated that the value of the assets that could become stranded in 2020 is $3.8 billion, and that the impact of this stranded investment is exacerbated by the fact that new generation would have to be built to replace the stranded assets, thus compounding the cost impact to Arizona customers.

Commenters stated that failure to amend the state emission limits will almost certainly result in forced early retirements, which would constitute a taking of private property in contravention of the Fifth Amendment to the United Sta tes Constitution. The commenters stated that the economic impact of forcing Newmont to close the TS Power Plant, which has more than 20 years of remaining useful life, would be devastating on two fronts: (1) the closure of the TS Power Plant would result i n stranded assets of approximately $450 million; and (2) closure of the TS Power Plant would leave Newmont without a reliable source of power in an area of northern Nevada with both limited generation and transmission capacity. The commenters stated that t he burden placed on coal

- fired assets, including the TS Power Plant, is too great to justify any unquantified purported benefits served under the Proposed Rule.

Commenters stated that the communities supplied by MEAG will remain contractually obligated
to pay for generation which EPA has unilaterally decided cannot be utilized in the future. The commenters stated that the communities that comprise MEAG have committed to fund over $ 400 million for flue gas desulfurization systems, selective catalytic reduc tion systems, and sorbent injection and baghouse systems for mercury control at these units to meet EPA and Georgia environmental requirements. The commenters stated that the resulting stranded costs of these investments will be borne over the next 25 year s by ratepayers in the communities.

Commenters stated that it would be an economic disaster for our customers and the State of Nebraska if EPA's Clean Power Plan would force closure of NPPD (a low cost generation source) or require the investment of signi ficant funds to meet the Plan as proposed and raise the costs of this plant. The commenters stated that its diverse generation mix has evolved to include natural gas, hydro, nuclear and wind in addition to coal, and allows NPPD to produce 42 percent of the ir generation carbon free.

Commenters stated that investments in air pollution controls (APCs) may become stranded costs, depending upon the final GHG Rule. The commenters stated that Dallman Unit 4 won accolades from engineering and environmental groups alike, and has some of the most advanced APCs of any power plant in the country, exceeding the controls of much larger neighboring investor

owned utilities. The commenters stated that in 2007, an Energy Assessment of Dallman units 31, 32 and 33 was perfor med to determine ways to improve efficiency and reduce energy loss, and CWLP then implemented many of the recommendations. The commenters stated that having recently assessed and implemented such recommendations will make attaining an additional 6% heat ra te improvement economically if not physically impossible.

Commenters stated that the county as a whole could also see a devastating effect if the coal

- fired plant which has received more than $600 million in clean technology upgrades in the last decade

we re deemed to be insufficient to meet the proposed standards.190 Commenters stated that the proposed emissions reductions will be impossible for Arizona's rural Electric Cooperative members to attain. The commenters stated that the impact to the citizens of
t his state and the economy cannot be overstated.

Commenters stated that the original cost of its ownership interest in Colstrip Unit 4 will not be fully depreciated until 2043. The commenters stated that any scenario resulting in the need to replace our C olstrip generation with, for example, a combination of renewables and associated balancing/regulation requirement (i.e. simple cycle gas plant generation), would mean our customers would be paying for the remaining investment in Colstrip Unit 4 and the rep lacement generation. The commenters stated that by the end of 2015, NorthWestern Energy, Otter Tail Power Company and Montana

- Dakota Utilities Company will have completed installation of an approximately $400 million air quality control system which will r educe nitrogen oxide, sulfur dioxide, particulate matter and mercury by about 90%. The commenters stated that the assumptions in the proposed Clean Power Plan reduce the capacity factor of the Big Stone Plant to 23%, a level which would result in stranding the $400 million air quality control system as well as the remaining unrecovered costs of each owner in the plant. The commenters stated that the plain language in Section 111(d) precludes EPA from exercising any discretion with respect to restricting the states' ability to incorporate remaining useful life and other factors into standards of performance as guaranteed by Congress.

Commenters stated that the proposal will retire or significantly reduce the operation of Seminole's facilities (both SGS and M GS), resulting in severe economic impacts on Seminole. The commenters stated that a forced retirement prior to the end of their useful life will result in substantial stranded debt, as well as additional costs associated with generation to replace these

un its. The commenters stated that IPM also projects that the proposal would have dramatic impacts on the NGCC and peaking units at MGS. The commenters stated that the IPM Policy Case projects that these units will operate in 2025 at a capacity factor of just 16.1 percent, representing a two

- thirds reduction in generation from 2012 to 2025. The commenters stated that EPA has not considered, and must account for, the severe economic impacts Seminole would face if the NGCC and peaking units at MGS are forced to reduce generation.

Commenters stated that costs associated with the premature retirement of a significant number of coal

- fired EGUs and the rushed construction of replacement infrastructure, in the form of natural

- gas and renewable

- energy generation units , transmission & pipeline will ultimately be borne by Oklahoma and its ratepayers. The commenters stated that a coal

- fired unit for which Building Block 1's heat

- rate improvement investment is made will then be forced to run at the reduced output level EPA data suggests in order to accommodate shifts to NGCCs and RE sources contemplated by Building Blocks 2 and 3. The commenters stated that it defies both fundamental economics and common sense to require utilities to make significant capital investments to improve heat

- rate efficiency only to nullify the benefits accrued by forcing the displacement or closure of those same coal

- fired units through a mandatory shift to NGCCs.

Commenters stated that forcing the premature closure of power plants that have year s

- and in many cases, decades

- of remaining useful life creates significant costs to utilities that will be borne by consumers and the economy.191 Commenters stated that the Proposed Rule threatens to substantially raise electric rates in Montana. The comm enters stated that compliance costs will increase the cost of providing electric service, which costs will in turn be passed on to residents and businesses (including LCG's members) in Montana in the form of higher rates (both retail and wholesale). The

co mmenters stated that Montana residents and businesses may also simultaneously be saddled with financial responsibility for assets that are stranded as a result of premature retirement, even when these assets still have remaining useful lives and value. The commenters stated that the Proposed Rule raises significant electric reliability concerns. The commenters stated that the Proposed Rule incorporates generic and unsupported expectations of levels of integrated renewable generation and EE that, when applie d to Montana, are extremely ambitious, almost certainly unachievable, and uneconomic under traditional standards.

Commenters stated that in 2013 the Neal 4 plant underwent a substantial environmental project of which Bancroft's share was approximately $85 0,000. The commenters stated that if the use of the Neal 4 unit is decreased to comply with the proposed plan additional resources will need to be added to replace it. The commenters stated that the stranded cost of the environmental upgrade and the cost o f new resources places a great risk on the 732 residents of Bancroft.

Commenters stated that if, as the EPA' s IPM model indicates, the State of Louisiana will likely find its best compliance option to be to direct the retirement of RPS

- 2, Lafayette Utili ties System (LUS) would be required to replace more than 50% of its generating capacity and more than 63% of its energy requirements with other generation alternatives. The commenters further stated that this would take new legislation, as neither LUS nor the municipalities that comprise the Louisiana Energy and Power Authority ("LEPA"), are subject to Louisiana Public Service Commission ("LPSC") regulation, and this requirement would have a crushing impact on a relatively small municipally

- owned utility (a nd its customers, not shareholders) which has very recently invested over $70 million for MATS compliance measures at RPS

- 2. The commenters noted that the analysis and financing for this project assumed planning for the unit until 2032. The commenters desc ribed in a table (titled: "Projected Rodemacher Environmental Compliance Costs") that the estimates for replacing RPS

- 2 with a similar amount of combined cycle capacity will result in a $738 million (20 year net present value (NPV)) increase in electricity costs, resulting in an average cost increase of 36.5 mills/kWh (an approximate increase of 43% for both residential and commercial customers). The commenters assumed that average monthly residential usage of 1266 kWh (estimate based on 2012

- 2013 actual re sidential billings) continues, this would increase the average LUS residential utility bill by over $550 per year, or more than 1 % of the average Lafayette area family's annual income, a very significant amount to the nearly 17% of Lafayette's population living below the poverty level. The commenters added that all of this additional cost will be incurred on in addition to the LUS rate increase already required to support LUS' 50% share of the nearly $140 million recently expended for MATS compliance proje cts. The commenters stated that the LUS' economic models project that replacement of RPS

- 2 energy with generation from existing resources would be even more expensive due to: a) the need for investor

- owned utilities, which now own nearly all of the NGCC ca pacity in Louisiana, to make a profit on their investments; and b) anticipated NAAQS compliance costs in the early 2020s. Furthermore, the commenters stated that as pointed out by the Louisiana Department of Environmental Quality ("LDEQ") in comments filed on September 14, 2014, the amount of existing NGCC capacity available has been significantly over

- estimated by the EPA. Therefore the commenters noted, the cost of securing existing capacity is expected192 to be even more expensive, driving LUS even more str ongly toward replacing RPS

- 2 if emission reduction requirements are not reduced to reflect the reality of the state's situation.

Commenters stated that EPA focuses only on whether EGUs may be required to make substantial capital investments late in the u seful life of an EGU and fails to recognize that many owners made prior investment decisions based on expected future operations. The commenters remarked that PPL Energy Supply's plants in Pennsylvania and Montana, and others like them operating in competi tive power markets, are not nearing the end of their useful lives. The commenters stated that EPA's proposal, if implemented, could result in premature plant shut downs, translating into millions of dollars of sunk costs, and the forced retirement of coal

- fired units will have particularly severe consequences for merchant generators like PPL Energy Supply. The commenters contended that because coal

- fired assets would have very little salvage value, forced retirement of coal

- fired generation could well mean bankruptcy and dissolution for many merchant plants, generating companies and ancillary services.

Commenters stated that all the nuclear, wind, and solar capacity calculations assume that, by 2020, coal

- fired energy production in Virginia is reduced by tw o

- thirds from 2012 levels. The commenters stated that maintaining coal

- fired generation in Virginia that is greater than one

third of 2012 levels

- including production from plants with significant investments which if retired would result in stranded cost s to Virginia residents and businesses

- would require even

more new zero

- carbon generation. The commenters stated that from 2005 to 2012, carbon emissions from Virginia generation facilities were reduced by approximately 40%. The commenters stated that nu clear uprates, heat rate improvements, unit retirements, energy efficiency, and the addition of significant new natural gas facilities, have significantly lowered carbon emissions in the Commonwealth. The commenters stated that the EPA's goal of providing States with flexibility to minimize stranded costs directly conflicts with carbon emission rates that, for Virginia, are set so low that compliance options are extremely limited. The commenters stated that a more aggressive displacement of existing resourc es will increase stranded costs, which is almost certain to contribute to increased, not decreased, electricity prices in regulated States. The commenters stated that Virginia ratepayers served by Appalachian Power Company, whose generation facilities are located primarily in West Virginia, face stranded costs associated with the carbon emission rates that the EPA proposes for West Virginia. Virginia and West Virginia ratepayers have only recently begun paying for more than $2 billion in environmental
contr ols necessary for Appalachian Power Company to comply with a 2007 EPA Consent Decree.

Commenters stated that because the proposal would likely result in the premature closure of existing power plants, the proposal's requirements amount to a regulatory tak ing requiring compensation because of the uneconomic curtailment it will require.

Commenters stated that the significant switch of generating capacity from coal to natural gas driven by this rule coupled with the accelerating manufacturing use of natural gas and the expected future significant export of natural gas for geopolitical considerations has the potential to fundamentally alter the natural gas supply supply/demand equation, increase natural gas pricing volatility, and impair the US manufacturing r enaissance from its full potential as a job

creating engine of economic growth. The commenters stated that these pressures in the US would have a significant detrimental affect not only on the broad US manufacturing base but193 specifically on the production of secondary (recycled) aluminum given the role natural gas as a key input into the secondary aluminum recycling process.

Commenters stated that the proposed rule would force Mississippi utilities to generate more electricity from natural gas, even ahead of lower

- cost options. The commenters stated that increasing customers' exposure to volatile natural gas prices is bad for business and business owners, as well as individual ratepayers. The commenters cited the American Coalition for Clean Coal Electricit y that the adoption of these regulations will lead to an increase of electricity rates of 14

- 19 percent in Mississippi and would place 3,400 direct and indirect coal jobs in jeopardy of being eliminated.

Commenters stated that manufacturers and others who use natural gas for purposes other than electric generation will also see projected cost increases up to $50 billion. The commenters stated that 187,000 direct and indirect job will be lost in the utility, rail, and coal industries alone by 2020 and these sectors will lose cumulative wages and benefits of $208 billion by 2035. The commenters stated that by forcing the retirement of a significant portion of the state's electric generation capacity, the rule puts at risk the reliability of Texas' electric gri d, the failure of which can have extremely dramatic financial impacts, as well as public health and safety impacts.

Commenters suggested that EPA's proposal threatens Pennsylvania's biggest competitive advantage, which is low energy prices, and threatens to drastically change the way Pennsylvania produces and uses energy. The commenters further stated that the proposed rule will significantly economic impact the business community as well as threaten reliability across the grid.

Commenters stated that wholesale electricity prices are rising at an even faster rate in regions of the country where the wholesale markets are administered by RTOs subject to jurisdiction of FERC.

Commenters estimated costs associated with using all four of the Building Blocks. The commenters noted that delivered electricity prices would increase by about 12% on average over 2017 through 2031. The commenters added that there are other factors that could add to impacts and costs:

• Potential infrastructure costs related to natural gas pipelines, electricity transmission, and voltage support or ancillary services

• Low projected capacity utilization of non

- retired coal units would lead to decreases in efficiency (i.e., increases in heat rates)

• additional wear and tear costs from oper ating coal units in a cycling mode, and potentially

• additional retirements, none of which are included in our modeling

• Costs related to unit ramp rate constraints, minimum load constraints, and delays in new build or retirement permitting194 Commenters stat ed that ratepayers will be forced to pay for the retirement of over 3000 megawatts (MW) of coal production, for new generation sources, and for previously installed environmental compliance measures for units that will have to be retired.

Commenters also stated that the assumption that the capacity factor at all NGCC units can be raised to 70% is an overreach into the resource planning authority of utility regulators. The commenters noted that rearrangement of fleet dispatch will place additional upward pr essure on rates.

Commenters noted that EPA has not considered the cost of stranded assets due to investment in generation fleets that will now be retired. According to the commenters, these costs will be reflected in consumers paying for utility investment s that will not be used.

Commenters also noted that EPA has failed to consider the costs associated with the remaining useful life of electric generating units that will be retired.

Commenters stated that delay in getting pipelines built will drive up Mi chigan's gas cost and increase gas deliverability challenges. The commenters stated that gas customers will be paying about $800 million more annually by 2025 due to higher gas prices and Michigan's electric customers will pay about $2.4 billion more annu ally by 2025 due to the displacement of coal by gas and up to $2 billion in capital costs associated with building new capacity to maintain reliability in light of CPP

- driven coal capacity derates and retirements.

Commenters stated that the proposed rules will increase both wholesale and retail rates for electricity, and their supplemental power supplier, Missouri River Energy Services (MRES), has analyzed the effect of the proposed rule and has informed them that compliance with the carbon rule is likely to cause an increase of nearly 20%, which is $35 million annually in our supplemental power supply costs. The commenters stated that this is in addition to an increase of almost 10%, which is $15 million per year caused by Environmental Protection Agency ( EPA) requirements for Regional Haze compliance, resulting in a total increase in wholesale power supply costs of $50 million annually just to comply with these two rules. The commenters further stated that the retail rates will have to be raised to cover t hese increased costs, putting significant economic pressure on residential, commercial and industrial customers. The commenters concluded that EPA's projection that the overall effect of the rule will be a decrease in the cost of electricity to end

- users is flawed in many respects and does not fully account for all of the costs required to comply with the proposal.

Commenters noted that Arkansas has a large manufacturing and industrial base which requires a large amount of electricity, and it is important that any new regulation does not drive up electricity rates for Arkansas consumers and businesses. The commenters estimated that implementing the Clean Power Plan as proposed would increase Arkansas's electricity rates by 18 percent by 2020, and the comme nters concluded that this would be unacceptable.

Commenters stated that if the proposed rule is approved, Wyoming will revamp nearly all aspects of its electricity generation, changing the way utilities regulated by the Commission select generation resour ces, dispatch and operate those resources, consider the useful and remaining lives of existing resources, invest in generation and transmission infrastructure, and in195 turn, deliver that electricity to consumers within Wyoming. The commenters stated that wi th these sweeping changes come with a host of unintended consequences, including significant cost and potential risk in the form of increased rates for electricity and potentially compromised reliability of electric service (NERA Economic Consulting projec ts that the proposed rule will cause a 22 percent increase in electricity prices for Wyoming consumers). The commenters stated that another study estimates similar impacts, including a peak wholesale electricity price increase of 28.2 percent for Wyoming c onsumers. The commenters stated that NERA goes on to say that if Wyoming consumers do not significantly reduce their electricity use, electricity prices in Wyoming could increase by 42 percent; they also projects double

- digit electricity price increases in 42 other states which would result in $560 billion that consumers nationwide will have to spend to reduce their electricity use.

Commenters stated that the proposed rule threatens to substantially raise electric rates throughout the country as compliance costs will increase the cost of providing electric service, which will in turn be passed on to residents and businesses in the form of higher rates. The commenters stated that not only will consumers be at risk of funding new investment required by the pr oposed rule, but residents and businesses may also be financially responsible for assets that are stranded as a result of premature retirement, even when these assets still have remaining useful lives. The commenters stated that the proposed rule places at risk several billions of dollars of investments in existing coal fired facilities (including coal leases) that state ratepayers have funded and have only partially paid off.

Commenters stated that the cost analysis EPA used to evaluate the proposed Clean Power Plan was inadequate as highlighted in an ERCOT 2014 report, which stated that accelerated resource mix changes will require major improvement to ERCOT's transmission system, posing significant costs not considered in EPA's Regulatory Impact Analysis . The commenters stated that the proposed rule incorporates generic and unsupported expectations of levels of integrated renewable generation and energy efficiency that are ambitious, unachievable, and uneconomic under traditional standards. According to t he commenters, the rule will remove the current diversity in our electricity supplies, diversity which saves consumers more than $93 billion in lower electricity costs, according to a study by HIS Energy, and which also reduces the variability of monthly u tility bills by half. The commenters stated that several studies (Energy Ventures Analysis and NERA Economic Consulting), show that the EPA plan will cost $366 to $479 billion over a 10

- to 15

- year period, raising electricity costs in more than 40 states, some with increases exceeding 20 percent; a study by the National Mining Association shows that if we experience another cold winter like the winter of 2013

- 2014, we can expect wholesale power prices to jump 27

- 55 percent across different regions, in all s tates, and businesses and households to pay $35 billion more for natural gas. The commenters stated that a combination of another cold winter followed by a warmer than usual summer would cost consumers $100 bill ion in higher electricity and natural gas pr ices. The commenters stated that the WPSC also uncovered significant errors in the cost of complying that had been calculated by EPA and that WSPC comments state that the CPP irrationally discriminates against western mine mouth EGUs as mine mouth EGUs loc ated near Gillette, Wyoming, depended on low cost fuel to offset the expense of air cooling; measures which undermine an original cost advantage undermine the economics of the entire plant. The commenters stated that the EPA analysis did not take into

acco unt the decline in public health and welfare that its proposed rule will cause by the increased amount of money consumers will have to pay for electricity and natural gas.196 Commenters stated that a recent study by Energy Ventures Analysis indicates that the impact of the proposal will cause a projected increase in the average homeowner's power bill of 41 percent from the year 2012 to the year 2020; further increases would occur as the CPP is implemented over the following 10 years. The commenters stated that total energy costs across the residential, commercial, and industrial sectors for the same period are projected to rise by 104 percent, an unacceptable increase.

Commenters noted that BPA is subject to multiple federal statutes and regulations. The

comme nters stated that the proposed rule and statewide targets require state implementation that is not yet defined, and will likely require coordinated action. The commenters were concerned that the EPA has not fully considered the complexity involved in this type of multi

- state coordination, which has the potential to create confusion and uncertainty for BPA customers and the potential for exposure to higher costs.

Commenters stated concerns that the Proposed Rule will result in large electric rate increases and will negatively affect reliability within the Midcontinent Independent System Operator region in which Great River Energy operates. The commenters also stated that these concerns are based on analyses conducted by various consultants and stakeholders, and including EPA itself. Commenters recommended that EPA should incorporate a mandate in the final rule for a periodic review of the impact of implementation to consumer rates and a mechanism to mitigate the rule's impact on electric consumers. Commenter s cited EPA's Regulatory Impact Analysis and that EPA projected a 7 percent increase in 2020, a 5.7 percent increase in 2025, and a 4.3 percent increase in 2030 for the Midwest Reliability Organization

- West region. The commenters remarked that these rate increases are in addition to any business

- as

- usual rate increases implemented by utilities annually, and that the average annual retail rate increase for Great River Energy's member cooperatives has been 4.04 percent between 2004 and 2013. The
commenters projected that EPA's estimated rate increase would be more than double the rate increases members' customers would otherwise experience. Commenters stated that all projections regarding the consumer rate impact of the Proposed Rule are guesses, and that th e Proposed Rule is extraordinarily complex and the permutations of how compliance will be achieved are virtually infinite. The commenters remarked that the positive contributions of inexpensive electricity to our national economy cannot be overstated, and that many consumers, including those in the territories served by electric cooperatives, are already struggling with increased utility bills. The commenters recommended that the final rule include a mandate to monitor and analyze its costs and benefits, an d provide for a mechanism to pare back the rule's requirements in the event those who predict manageable cost increases are not correct.

Commenters stated that the resulting expense to electricity rates, will have the effect of increasing poverty, and red ucing business efficiency.

Commenters stated "EPA's proposal will provide no real benefits to Louisiana or the nation" and "The Proposal's positive impact on climate effects is not sufficiently demonstrated." "Despite the lack of any significant benefits, modeling by NERA Economic Consulting indicates the Proposal will be very costly to Louisiana rate payers. The modeling by NERA indicates the Proposal will cause a 16% increase in retail electricity prices for Louisiana consumers with a peak year increase of 20%."197 Commenters stated that reducing coal utilization at existing power plants will likely result in more volatile and expensive electricity prices, but that EPA does not show that these regulations will significantly reduce global greenhouse gas emi ssions. The commenters stated that the EPA's proposal would likely make these foreign power producers more attractive to some industries, encouraging greater utilization of unregulated coal power plants abroad. The commenters stated that 60,104 megawatts o f electricity from 381 coal units in 36 states are scheduled for retirement.

Commenters cited EVA projections that average annual household gas and power bills would increase by 35 percent from 2012 to 2020 if these regulations are finalized. The commente rs stated that EPA's proposal to increase the use of natural gas derived electricity without increasing its cost is unrealistic. The commenters stated that EPA's assumption that gas

- fired CCGTs can operate at an average utilization rate of 70 percent does not reflect real

- world experience or reasonable modeling of the U.S. power markets.

Commenters stated that the proposed rule will greatly increase the cost for electricity, natural gas, and LPG, and threaten the steady supply of these resources

- all to the detriment of Indiana farmers and agricultural businesses. The commenters stated that the proposed rule will decrease the available supply of natural gas, which will drive up costs for farms and agricultural products that farms utilize. The commenters c ited NERA projected compliance costs of $41 billion to $73 billion per year and total costs between 2017 and 2031 of $366 billion to $479 billion (in 2013 dollars). The commenters stated that EPA ignores the impact of higher natural gas and LPG prices that will be created by this rule on other economic sectors, such as residential, commercial and industrial heating, agricultural use, and as feedstock in chemical manufacturing. The commenters stated that farmers and agricultural businesses are particularly s ensitive to increases in natural gas costs since they are both significant users of natural gas and LPG, and because they are significant users of products such as fertilizers which use natural gas as a chemical feedstock. The commenters cited NERA project ions under option 1 that electricity prices will experience rate increases from a low of 12% to a high of 17% over the period 2017 through 2031. The commenters stated that natural gas will be in greater demand for electricity generation, which leaves quest ions regarding pipeline capacity and the impact on supplies for residential heating, agricultural use, chemical feedstocks and other common uses. The commenters stated that the current diversity of energy sources for electrical generation in the United Sta tes provides a balance of cost, supply, availability, risk and other factors that ensure we have a steady stream of relatively low cost electricity and natural gas. The commenters stated that building Blocks 2 and 3 will disrupt that balance and do not pro vide the mechanisms needed to ensure cost

effective development of new energy sources. The commenters stated that the variability in market pricing for gas reflects the intangible nature of the fuel, and that a transition towards greater usage of these fue ls will increase the nation's vulnerability to reliability problems. The commenters stated that existing natural gas pipelines are operating at near capacity today, and some regions have inadequate capacity. The commenters stated that in order to create an infrastructure to ensure it remains consistently cost

- effective the country will need to invest in thousands of miles of pipelines and millions of cubic feet of storage capacity and that EPA has not included the billions of dollars needed for these invest ments in their cost estimates. The commenters stated that natural gas prices are sure to rise above today's lower

- than

- average levels because of increased demand for gas created by new NGCC generation and natural gas supplies are prone to rapid price chang es due to shortages which lead to incalculable costs. The commenters stated that it is uncommon to find natural gas supply contracts that extend for more198 than one year. The commenters stated that because natural gas prices were at or near historical lows w hen the proposed rules were drafted, any supply or demand issues will drive prices further upward. The commenters stated that it is dangerous public policy for EPA to base regulatory decisions on the highly volatile economics of natural gas prices, particu larly when the current prices are on the low side of the volatility curve.

Commenters stated that natural gas fired electric generation throughout the United States will far exceed that which EPA anticipates in its CPP and that prices will spike as a resu lt of the CPP

. The commenters stated that natural gas

- fired generation in Oklahoma will more than double by 2020, which will place significant upward pressure on natural gas commodity and transportation prices

. The commenters stated that the EPA has failed to fully assess the direct and substantial indirect impacts the CPP will have on the economy as well as the day

- to

- day functioning of society thereby disregarding these price impacts.

Commenters stated that should natural gas prices return to the volatil ity seen in past years, the diminution of resource diversity from abruptly shuttering the coal plants will increase risk in Arizona's electricity market and destabilize electricity prices for consumers.

Commenters stated that EPA is creating conflicting m essages with the goal of making coal plants more efficient and then limiting its production and efficiency, with a predilection for natural gas generation. The commenters stated that the proposed CPP will change the market dispatch of generating units by c hanging the most economic generating resource to the most environmental friendly resource creating a significant cost shift; such a shift in market prices will have an adverse impact on consumers. The commenters stated that we will be more dependent on the cost of natural gas and although the long term market appears to be stable due to the science of fracking, switching fuels to a single source becomes risky and opens the door for price fluctuations to the consumers as a result of natural gas prices. The c ommenters stated that they expect to see more development of natural gas plants as long as natural gas is abundant and priced competitively.

Commenters stated that EPA should not be claiming benefits that have already been achieved, but rather should be limited to those benefits that are anticipated from the implementation of the proposed rule. The commenters stated that with respect to the cos t of implementing the proposed rule, EPA estimates only 5.4 to 8.8 billion dollars. The commenters stated that first, these costs are unrealistically low because EPA assumes that the utilities can easily switch fuels for existing sources and build new powe r plants that rely on natural gas and renewable energy. The commenters further stated that EPA also minimizes the cost of the proposed rule because it unrealistically assumes that the price of natural gas will remain at its historically low levels for the next 25 years; and in addition, higher energy costs and disruption in energy delivery and capacity will impose significant new costs on all energy consumers. The commenters suggested that when these reasonably anticipated costs are considered, the cost of the proposed rule could increase tenfold.

Commenters cited the U.S. Chamber of Commerce estimated economic impacts. Commenters opposed the proposed regulation due to the estimated economic impacts to businesses, employees and the nation as a result of re quirements that will force the closure of coal

- fired199 EGUs. The commenters listed the following impacts, which have been projected to lower the US GDP by $51 billion annually through 2030 per the U.S. Chamber of Commerce:

• 224,000 jobs lost annually through 2030 by the U.S. Chamber of Commerce;

• increased cost of living via higher electricity rates, a devastating impact on lower

income families in Kentucky and other states dependent on coal

- fired electricity generation;

• increased cost for industrial and man ufacturing businesses upon which the economy of Kentucky is highly dependent; and

• increased volatility and uncertainty regarding future electricity costs for families and businesses due to a forced migration to highly volatile natural gas

- fired and interm ittent wind and solar electricity generation.

Commenters stated that the costs of the capital investment needed for the development of new generation sources and transmission projects will be borne by commercial, industrial, and residential ratepayers.

C ommenters stated that the WVPSC has determined that the proposed section 111(d) guidelines will result in significant price increases and reduce the availability of economical and reliable power to West Virginia business customers.

Commenters stated that the proposed rule will impose new costs and have an economic impact on electricity prices affecting commercial, industrial, and residential rates. The commenters stated that the costs of the capital investment needed for the development of new generation

s ources and transmission projects will be borne by ratepayers.

Commenters stated that the proposal overestimates what is technically feasible, and/or entails costs significantly higher than those projected by EPA. The commenters stated that if finalized in its current form, the proposal would substantially increase the rates Wyoming consumers, including WIEC's members, pay for their electricity, and could significantly impact the reliability of the electrical service they receive.

Commenters stated that as a rural electric cooperative, the dramatic increase in rates from the CPP will exacerbate the difficulty that poor Americans already face with the cost of electricity. The commenters stated they are providing EPA with comments on the special consideration s of the impact of the proposed CPP on the ability of rural electric cooperatives to comply with the REA federal mandate that EPA should factor into promulgation of a final rule, if any is issued. The commenters stated that they have invested billions of d ollars in retrofitting their fossil units with state of the art emissions controls and installing new, very low emission generation in order to comply with other CAA regulations and members must still pay for them even though the CPP will restrict the oper ation of or force the retirement of this generation.

Commenters cited EVA that Texas would be amongst the states with the largest economic penalty, and that in Texas, annual household electricity and gas bills would increase by more than $1,050 in 2020, c ompared to 2012 representing a 54% increase. The commenters stated that200 the impacts of the proposal to Texas alone exceed many of the cost impacts EPA projects under the proposal for the entire country.

American Action Forum Commenters cited an American A ction Forum estimate that if the new EPA regulations go into effect, Americans could see their electric bills increase annually by more than 10 percent

- $150 for the average consumer

- by the end of the decade. Commenters cited an EPA estimate that actual electricity bills received by consumers will increase anywhere from 1.1 percent to 3.2 percent in 2020, then decrease several percentage points in 2025 and by as much as 8.7 percent in 2030, reflecting "the combined effects of changes in both average reta il rates (driven by the effects of all four building blocks) and lower electricity demand (driven by the fourth building block, demand

- side energy efficiency)." The commenters stated that agency's optimistic outlook is based on a vague notion that everythi ng will work out the way EPA thinks it will, but that the utility industry and TAUC contractor members know that almost never happens. The commenters stated that EPA offers no remedy to consumers during the initial electricity price spikes in 2020.

Commen ters cited an EPA estimate that actual electricity bills received by consumers will increase anywhere from 1.1 percent to 3.2 percent in 2020, then decrease several percentage points in 2025 and by as much as 8.7 percent in 2030, reflecting "the combined e ffects of changes in both average retail rates (driven by the effects of all four building blocks) and lower electricity demand (driven by the fourth building block, demand

- side energy efficiency)." The commenters stated that agency's optimistic outlook is based on a vague notion that everything will work out the way EPA thinks it will, but that the utility industry and TAUC contractor members know that almost never happens. The commenters stated that EPA offers no remedy to consumers during the initial ele ctricity price spikes in 2020.

Commenters stated that EPA's data show that the proposed rule would cause the closure of as much as 49 Gigawatts of coal

- based electric generating capacity by 2020, and lead to a 25% or greater reduction in the amount of coa l produced for electric generation in that year. The commenters stated that including the MATS rule, the U.S. is facing the loss of 126 GW of coal

based generating capacity between 2010 and 2020, more than 10% of the nation's electric generating fleet, and approaching 40% of the nation's coal

- fired capacity. The commenters stated that reduced power supply from retired plants will lead to increased electricity prices, spreading the economic impact to consumers and businesses. The grid will be at increased r isk of brownouts and blackouts during peak electric demand periods, endangering the public. 17088, 17091 (1, See Section 8.9 for discussion of reliability.)

Commenters stated that EPA Seriously Underestimates the Cost of Complying with the Rule and the Imp act of the Rule on Consumer Electricity and Natural Gas Prices. The commenters cited Energy Ventures Analysis (EVA) analysis of the impact of the rule that estimated wholesale electricity costs will increase by $274 billion, non

- power natural gas costs wi ll increase by $80 billion, and additional capital costs for replacement power will be $53 billion. The commenters stated that these costs excluded investments in natural gas pipeline and electric transmission the rule will require. The commenters stated that forty

- four states will see double

- digit increases in their wholesale power prices, with 24 states facing increases close to or in excess of 20 percent. The commenters cited a NERA projection that the total cost of the proposal would be to be $366 bi llion to $479 billion over a 15

- year period. The NERA study cited by the commenters201 found that the proposal will cause double

- digit electricity rate increases in 43 states, and a 12% to 17% average increase in electricity prices Nationwide, with fourteen s tates facing peak year electricity price increases that could exceed 20%.

Commenters stated that in 2020, the average annual West Virginia household electricity and gas bills will increase by $750

- a 38% increase

- and the total annual cost of power and gas in West Virginia will grow from $2.7 billion to over $4 billion. The commenters stated that in 2020, the average annual U.S. household electricity and gas bills will increase by $680 in 2020

- a 35% increase

- and the total annual cost of power and gas in the U.S. will grow from $475 billion to over $750 billion. The commenters stated that U.S. compliance costs could total upwards of $366 billion, with 43 states facing double

- digit electricity price increases, and CO2 concentrations would be reduced by less th an one

- half of a percent, which would result in reducing the average global temperature by less than 2/100th of a degree and reducing the sea level by 1/100th of an inch. The commenters stated that EPA has failed to consider adequately the potential econom ic impact of its Proposed Rule due to the rise in electricity prices. The commenters cited NERA's conclusions that the rule would cost at least $41 billion per year, and under one scenario, $73 billion per year, with a total projected cost of $366 billion to $479 billion over a 15

- year period. The commenters stated that the Proposed Rule would cause 43 states to see a double

- digit electricity rate increase, and that nationwide, the proposal would cause a 12% to 17% average increase in electricity prices. Th e commenters stated that fourteen states face peak year electricity price increases that could exceed 20%.

Commenters stated that electricity rates will rise under this rule because using existing sources of electricity is less expensive than building new sources. The commenters stated that the average cost of electricity from existing coal plants is only $36.4 per mWh compared to new natural gas costing $66.3 per mWh, new wind costing $80 per mWh, and new solar costing $80.3 per mWh. The commenters cited Energy Ventures Analysis, that power and natural gas costs for customers would likely increase by 60 percent in 2020 compared to 2012

- a cost hike of $284 billion. The commenters cited NERA estimates that, when all four of the building blocks are options f or the states, electricity prices would increase by 12 percent on average between 2017 and 2031, and when states' options are limited by their resources, electricity prices would rise by as much as 17 percent. The commenters stated that EPA would thus func tionally mandate that Americans use less electricity. The commenters cited NERA estimates that, when the consumer share of energy efficiency costs is included, the total costs related to electricity rise. The commenters stated that in the case in which sta tes can use all four building blocks, electricity

- related costs are projected to rise by about $34 billion per year between 2017 and 2031, where states are limited by their resources that figure shoots up to $48 billion per year. The commenters stated that Americans' electricity bills could rise by as much as $210 annually because of the proposed rulemaking. The commenters cited Policy Navigation Group that local governments will have to spend more money buying electricity to power schools, water treatment plants, municipal buildings, and other local government

- provided services; municipal governments' fee revenues will likely decrease, as consumers spend more on electricity and less on goods and services in the local area and therefore do not pay as much in local government fees; and local governments' tax revenues will decline, as consumers spend more on electricity and less money on taxable goods and services. The comment cited the Virginia SCC staff estimate that costs for Dominion Virginia Power "would l ikely be between $5.5 billion and $6.0 billion on a net present value basis, and202 several billions of dollars of investments in existing coal facilities that were made to satisfy existing rules would be placed at risk.

Commenters stated that they had used a mathematical model which included load growth and calculated annual cost of compliance for South Carolina, excluding costs of natural gas pipeline construction required to source additional generation in the state with reliable fuel supply with regard to any scenarios. The commenters provided model outputs predicting 2030 electricity cost increases of 12%, 16%, and 22% for residential, small commercial and industrial customers to meet a 772 lb/MWh goal in the current economy. The commenters provided mode l outputs predicting 2030 electricity cost increases of 5%, 7%, and 10% for residential, small commercial and industrial customers to meet a 990 lb/MWh goal in the current economy. The commenters provided model outputs predicting 2030 electricity cost incr eases of 22%, 28%, and 38% for residential, small commercial and industrial customers to meet a 772 lb/MWh goal in a "strong" economy. The commenters provided model outputs predicting 2030 electricity cost increases of 15%, 19%, and 27% for residential, sm all commercial and industrial customers to meet a 990 lb/MWh goal in a "strong" economy.
Commenters cited EVA estimates of a $284 billion increase in annual power and gas costs for residential, commercial and industrial customers beginning in 2020 compare d to 2012, representing a 60% increase over current costs with annual power and gas costs further increasing each year post

- 2020. The commenters cited EVA estimates that annual residential power and gas costs would increase by $102 billion beginning in 202 0 compared to 2012 and would continue to escalate in subsequent years. The commenters cited EVA estimates that average annual household gas and power bills will increase by $680 or 35% from 2012 to 2020 and continue to escalate year

- after

- year as EPA's pro posed rule grows more stringent. The commenters cited EVA estimates that annual average home gas heating bills will increase roughly $340 or 50% from 2012 to 2020, annual average electricity bills will increase roughly $340 or 27% from 2012 to 2020, and t hat cost increases would significantly affect the U.S. industrial sector nationwide, as the total cost for electricity and natural gas would increase 92% from 2012.

Commenters stated that according to South Dakota's economic modeling, it is apparent that EPA has misstated the fact that annual electric bills will be reduced for consumers as a result of the Clean Power Plan. The commenters stated that some consumers may take advantage of energy efficiency programs and help reduce their total energy consumpti on, however not all consumers will do so based on certain energy efficiency market barriers (e.g. more efficient technologies are too costly or replacement of existing technology is not yet needed), and that the impacts will be even greater for those consu mers that are unable to invest in energy efficient technology. The commenters stated that SD PUC's modeling identifies there will be adverse rate impacts in the state as a result of the Clean Power Plan, that rates will increase drastically and annual ele ctric bills for customers will rise as a result.

Commenters stated that EPA grossly under

- estimates the overall cost of the proposed rule, and cited a recent study estimating the compliance cost of the CPP at least $366 billion. The commenters stated that if the CPP, with its interim rate

- based targets, were enacted as proposed, Ameren Missouri would need to construct NGCC capacity prematurely, and that the new NGCC capacity would be dispatched solely for the purpose of the CPP and outside of normal plant203 economic dispatch, resulting in increased cost to customers. The commenters stated that the resource changes resulting from the interim goals of the CPP would have an estimated cost to Ameren Missouri customers of $4 billion due to the new generation and a cceleration of other new capacity additions and costs associated with uneconomic dispatch. The commenters stated that the Agency can mitigate the harmful economic impact of its regulatory program by foregoing mandatory interim goals and instead should only set final goals. The commenters stated that the overall implementation cost of the CPP in terms of energy prices and reduced economic growth is enormous and will be borne by customers and the states for decades to come. The commenters stated that if EPA p ersists with a rule that requires early and significant progress toward the final goal, all deadlines should be deferred and made contingent upon SIP approval.

Commenters cited ERCOT estimates that "energy costs for consumers may increase by up to 20% in 2020" under EPA's proposal, without accounting for transmission and natural gas supply infrastructure and other costs. The commenters cited NERA estimates that the proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% relati ve to a base case without the rule, and that the weighted average price increase across all customer classes (Residential, Commercial, and Industrial) is projected to be 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that E PA's proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% relative to a base case without the rule. The weighted average price increase across all customer classes (Residential, Commercial, and Industrial) is projected to b e 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that residential rates could increase by approximately 3.3 cents per kilowatt

hour under the proposed standards, a 25% increase, relative to a base case without the rule,
equ ivalent to an increase in average household electric bills of $33 per month or nearly $400 per year which would impact all Texans but is particularly harmful for those with marginal income, such as elderly customers on fixed incomes or low

- income customers

. Commenters stated that EPA understates the costs of the proposal on ERCOT electricity consumers. The commenters stated that EPAs modeling implies a 9.9% retail price increase for ERCOT by 2020, falling to 3.9% by 2030, however, the NERA analysis estimat es that average 2020 to 2030 delivered electricity prices could jump by 25% or more.

Commenters stated that current market power prices in competitive markets do not support making some capital investments such as a number of heat rate improvements, and t his could lead to further shut downs of coal plants beyond EPA's assumptions. The commenters stated that in the regulated markets, additional costs, if approved by the state PUC, will be passed on to the customer through higher prices.

Commenters stated t hat no decrease in electricity bills or electricity rates would result from the proposed rule, but instead, there will be a substantial increase in the electricity cost for MEAG, the 49 public power communities that it supplies, and the residential and bus iness electricity consumers in those communities. The commenters cited NERA that nationally, the delivered electricity price in cents per kWh would increase by 12%. The commenters cited an alternative analysis that considered only two building blocks ("BB 1

- 2"), it which NERA found that the delivered electricity price would increase by 17%. The commenters cited NERA findings that the resulting national increase in energy cost to consumers would be $366 billion to $479 billion (in204 2013 dollars) over the same period, and that for Georgia, the delivered electricity price in cents per kWh over the 2017

- 2031 period would increase by 12% to 13% for the two cases.

Commenters stated that in 2013, almost 89% of electricity generation in Wyoming came from coal and ab out 10% came from renewable energy resources, primarily wind. The commenters stated that Wyoming had the third lowest average price for electrical power of any state in 2013. The commenters stated that as the Clean Power Plan forces the existing coal power plants to close, replacement renewable or gas power plants will have to be built to accommodate energy efficiencies required by this plan. The commenters stated that the resulting increase in energy rates are estimated to be as high as 26%. The commenters stated that in addition to rate increases due to building new gas or renewable energy power plants, rates will need to be increased to pay for the millions of dollars of pollution control upgrades previously installed by existing power plants in order to meet other EPA air quality requirements. The commenters stated that this is especially true if these power plants are forced to shut down before they can successfully amortize these pollution upgrades over their useful operational life.

Commenters cited a 2012 study conducted by Kadrmas, Lee and Jackson for the North Dakota Industrial Commission showing that North Dakota will need an additional 2000 megawatts of generation between 2012 and 2032, and the region

- including North Dakota

- will require an add itional 2,500 megawatts. The commenters stated that if the proposed rule is not reworked to provide flexibility and allow North Dakota coal plants and other energy sources to meet this need, prices will inevitable go up and reliability will falter.

Commenters stated that current market power prices in competitive markets do not support making some capital investments such as a number of heat rate improvements, and this could lead to further shut downs of coal plants beyond EPA's assumptions. The comm enters stated that in the regulated markets, additional costs, if approved by the state PUC, will be passed on to the customer through higher prices.

Commenters stated that it was very concerned about the affordability, stability and reliability of the su pply of electricity in the wake of current and planned power plant retirements and especially, proposed reductions in carbon emissions in the U.S. Environmental Protection Agency's (EPA) Clean Power Plan.

Commenters cited Energy Ventures Analysis that by 2020 Colorado residential average annual power bills will increase more than $250 and average home gas heating bills will rise by over $350 forcing the average family to pay $2,164 for heat and power. The commenters stated that industrial rates for electri city will increase by 52% by 2020

. The commenters stated that a few years ago hotel guests experienced an "energy charge" on their bill at check

- out, reflecting then

skyrocketing costs for heating and cooling powered by electricity and natural gas. The

com menters stated that the result of changing the power generation mix too quickly will be felt among all Colorado citizens as well as in the highly

- touted tourism industry.

Commenters cited Energy Ventures that Arkansas would see, on average, a 19% increase in wholesale energy prices as a result of the CPP and its carbon regulation

. The commenters stated that another study has concluded that certain Arkansas residential ratepayers could incur up to a 40% increase in their electric bills as a result of Clean Power Plan implementation

. The205 commenters stated that the mass replacement of low

- cost coal generation will require the United States to spend an additional $17.6 billion by 2020 to be spent in compliance and another $53 billion by 2030. The commenters sta ted that industrial electricity costs would increase from about $65.1 billion in 2013 to $165.6 billion in 2030

- a total of 154% by 2030 as a result of the CPP.

Commenters stated that MISO has issued a study finding that the GHG Rule will cut the amount of energy MISO generated from coal from 69% to 33% by 2030, with little evidence that natural gas, renewables and reduced demand can reliably replace the coal

- fired generating units expected to retire due to the GHG Rule in either the short or long term. The commenters stated that the proposal will significantly drive up energy costs at a time when we are working our way out of the longest recession in US history, with negligible impact on global carbon emissions.

Commenters stated that any loss of wholesale revenues through permit imposed operating hour or annual MWh restrictions will result in increased revenue requirement from ratepayers. The commenters stated that for OMU ratepayers, the loss of capacity revenues associated with ESGS Unit 1 would result i n a 5

- 7% rate increase across all rate classes. The commenters stated that considerable heat rate penalties would be associated with generation levels below design which would increase the number of MWhs that would have to be reduced. The commenters stated that at a minimum, the loss of wholesale revenues associated with the proposed 18% reduction would result in an electric rate increase greater than 12%. The commenters stated that OMU projects residential rates to increase by over 15% (non

- inflation adjus ted) between 2015 and 2020 without considering impacts of proposed the Proposed Rule, and that compliance with GHG legislation could increase the potential rate increase for OMU's customers by an additional 40%. The commenters stated that EPA's cost analys is in the RIA does not address secondary price effects corresponding to the increased costs of goods produced in manufacturing intensive states such as Kentucky. The commenters stated that the Kentucky Energy and Environment Cabinet's modeling projects tha t a 10% increase in the price of electricity (10% is conservative) would result in a 1.1% reduction in Kentucky's GDP

- a loss of $2 billion to the state of Kentucky

. Commenters stated that residential rates in Minnesota are projected to increase by 11 per cent to 14 percent, industrial rates are projected to increase 22 percent, and gas bills are expected to increase by 45 percent. The commenters cited MISO projections that the 20

- year discounted cost of rule within its footprint would be between $55 and $8 3 billion. The commenters cited an analysis conducted by London Economics that the Clean Power Plan would increase wholesale power prices by up to 40 percent in MISO by the year 2020.

Commenters cited a November 2014 report, "Energy Market Impacts of Rece nt Federal Regulations on the Electric Power Sector," prepared by Energy Ventures Analysis that found that between 2012 and 2020, all electric and gas customers would spend 60 percent (in nominal terms; 37 percent in real terms) more in energy costs. The c ommenters stated that residential increases would be 35 percent (nominal; 15 percent real) while industrial customers would experience electric and gas increases of 92 percent (nominal; 64 percent real). For Kentucky residents, annual electric and natural gas spending would increase by 45 percent (nominal; 23 percent real). The commenters cited a study prepared by IHS Energy, "The Value of US Power Supply Diversity" that concluded that the loss of fuel diversity in the production of electricity will increas e retail electricity prices by 25 percent and will reduce the average American206 household's disposal income by dollar 2,100. The commenters cited a study prepared by NERA Economic Consulting, "Potential Energy Impacts of the EPA Proposed Clean Power Plan" ( Oct. 2014), that Kentuckian's can expect 12 percent increases in delivered electricity prices under a "state unconstrained scenario" and 21 percent under a "state constrained scenario". The commenters cited "ERCOT Analysis of the Impacts of the Clean Pow er Plan" findings that ERCOT consumers could expect retail energy price increases of 14 percent to 20 percent in 2020 and 5 percent to 7 percent in 2029. The commenters stated that increases in utility rates resulting from the proposed CPP compound the aff ordability issue for WKU and create additional barriers to upward educational attainment for our younger generation.

Commenters cited NERA Economic Consulting projections that the CPP alone will cause a 12

- 13 percent increase in retail electricity prices in Georgia plus significant costs that electricity consumers would need to spend to reduce their electricity use. The commenters cited Energy Ventures Analysis estimates that the annual energy costs for households in Georgia, including both electricity and natural gas, to increase by 31% from 2012 to 2020. The commenters stated that EPA's compliance cost estimates do not capture the subsequent adverse spillover impacts of higher electricity rates on overall economic activity.

Commenters cited NERA estimate s that the proposed Clean Power Plan would cost between $41 and $73 billion per year, and cause electricity rates to increase between 13 percent and 14 percent in New Mexico. The commenters cited an analysis conducted by Industrial Energy Consumers of Amer ica estimating that the Clean Power Plan would increase wholesale power prices in the State by up to 23 percent.

Commenters stated that the four Building Blocks EPA has based the rule on suffer from technical and economic problems that will result in this regulation costing far more than EPA projects. The commenters cited NERA projections that electricity prices will experience rate increases from a low of 12% to 17% over the period 2017 through 2031, and natural gas prices will increase from 2% to 29% dep ending on the scenarios that are executed

. The commenters cited Energy Ventures Analysis estimates that electricity and natural gas costs for residential, commercial, and industrial customers will increase by 60% by 2020 because of the GHG ESPS, the MATS rule and other EPA regulations aimed at the electric power sector. The commenters stated that this will cost $284 billion dollars by 2020, with the total cost increasing with each additional year of implementation and residential energy costs will increase by $680 per year by 2020. The commenters s tated that total energy costs for industry will increase by 64%, a $200 billion increase that will be passed on to their customers or result in factory closures and operations moving overseas

. Commenters stated that hurdles to construction in Wyoming inclu de limited site acquisition potential and complex endangered species issues. The commenters stated that assuming the construction of natural gas generation could be done by 2020 is an unrealistic assumption, given engineering, permitting, transmission and construction timelines. The commenters stated that even assuming the completion of an NGCC plant sometime in the near future, the cost to do so will also have an impact on MRES and its members, as shutting down a unit and replacing it with an NGCC plant w ould cause an additional increase in wholesale costs of 20%, over and above the 10% cost increase caused by the installation of the SCRs. The commenters stated that as a result, its member community of Pella, Iowa, which receives 100% of its power from207 MRE S, will experience an increase in its wholesale costs of 30% just after we have undertaken major projects to reduce CO2: Pella has retired its local coal plant and MRES is constructing a new 36 MW hydroelectric facility near Pella. The commenters stated t hat rate increases of this magnitude endanger economic development and present a very real potential that electricity will become unaffordable for the poorest among us and make electricity more expensive for facilities in the United States and potentially cause companies to abandon plants and relocate overseas.

Commenters stated that over

- reliance on any one fuel source creates extraordinary volatility and risks for consumers and the economy. The commenters stated that when 8,358 MW of coal generation are forced to retire (as per EPA's estimates for 2020) as a result of Block 2, numerous Texas jobs will be lost and the resulting increase in natural gas price will create more volatility and significantly higher retail prices for Texas electric consumers.

Co mmenters cited NERA Economic Consulting projections that the CPP will cause a 12

- 13% increase in retail electricity prices in Georgia, plus the significant costs that electricity consumers would need to spend to reduce their electricity use. The commenters cited a projection by Energy Ventures Analysis that the annual energy costs for households in Georgia, including both electricity and natural gas would increase by 31% from 2012 to 2020

. The commenters cited the North American Electricity Reliability Corp oration (NERC) conclusion that the agency's proposed regulatory deadlines "would increase the use of controlled load shedding and potential for wide

- scale, uncontrolled outages

. " The commenters stated that during the 2014 polar vortex, some regions of the country experienced a price spike on the electricity spot market and demand for natural gas in excess of supply, which would have led to interruptions of electricity service if other generating resources

- particular those powered by coal

- were not there.

Commenters stated that prices are projected to increase if Montana ultimately adopts any of the compliance scenarios recently identified by the Montana Department of Environmental Quality ("MDEQ")

. The commenters stated that MDEQ ignored the required bui ld

- out of the transmission grid to support the required increase in renewable energy generation and assumed that wholesale market prices would fully compensate Montana developers for their costs. The commenters stated that the net cost to Montana retail cu stomers would range from $1.7 to $2.7 billion (2013 NPV), with price increases ranging from 13% to 21%. The commenters stated that EPA did not disclose its pricing models in the Proposed Rule.

Commenters cited NERA Economic Consulting that Ohio would see average annual electricity rates increase by 12 percent, and across the entire United States, these increases are expected to result in a total of $366 billion in new expenditures for consumers

. Southwest Power Pool Commenters stated that replacing coal

- po wered generators with natural gas generators will increase the cost of electricity for consumers, increase the volatility of electric prices, and decrease overall system reliability

. The commenters stated that by shifting Arkansas's baseload energy fuel fr om coal to natural gas, electric reliability will be dependent on the ability of natural gas generators to contract for firm natural gas transmission rights and subject to the increased costs associated with these rights.

Commenters stated that adoption o f the proposed rule will result in a resource portfolio that is unreasonably leveraged toward natural gas

- fired generation. Such a shift would be imprudent208 from economic, security, and reliability standpoints. The commenters stated that the diversification of Arizona utilities' resource portfolios not only affects reliability but directly impacts rate base. The commenters stated that the rates that ratepayers ultimately pay include the utilities' costs to provide service.

Commenters stated that the lion's share of the cost to generate electricity is the fuel cost and that historically, coal price annual increases have been modest but gas prices have fluctuated wildly over the past 40 years.

Commenters stated the EPA's bad policy will result in increased co sts to be shouldered by every man, woman and child in the United States, which will ultimately make us all losers in the end.

Only five source categories have been subject to regulation under section 111(d). Where EPA has regulated existing sources under s ection 111(d), the impact of the rule was generally limited. In one rule, EPA regulated a source category that contained as few as 31 sources. In another, affected source categories existed in only a limited number of states. The only previous application of section 111(d) to regulate a common source category was projected to impose annual costs of about $90 million. EPA's current section 111(d) proposal, with an annualized of over $8.8 billion and affecting 1,228 sources, will have a substantially greater impact than any of these past section 111(d) regulations.

Commenters stated that since 2005, CO 2 emissions from all fossil fuel plants have decreased by 13 percent, and many states highly dependent on coal based generation have already achieved significant emission reductions, but still face the additional burden of further reducing the CO 2 emissions on the short time table set by the EPA's proposed rule. Commenters recognized that the states will have flexibility in developing the measures to achieve the C O 2 emission reduction goals called for by the Clean Power Plan; however, the stringency of the state reduction goals will nonetheless have the effect of dictating for the first time how states regulate the generation use of energy. Commenters continued tha t EPA projects that the proposed CO 2 reductions would reduce U.S. coal production for electric generation by 35 percent from 2009 levels by the year 2020, with a comparable reduction of coal based electric generation, and even larger regional coal producti on reductions are projected by 2020 for Appalachia, a 63 percent reduction in the west, a 47 percent reduction.

Commenters said as proposed, the Clean Power Plan could leave residential, commercial, and industrial U.S. consumers exposed to less reliable, more expensive, and more volatile electric markets in the future.

Commenters stated that by usurping the role of states under 111(d) and justifying reductions at the source category with outside

- the

- fence measures at unregulated entities, EPA's CPP sets da ngerous precedent for other source categories. Commenters stated that EPA should not proceed with additional GHG standards of performance for other source categories for the following reasons: EPA has no legal obligation to do so; source categories in the manufacturing sector require consideration of impact by a broad range of factors that EPA has not considered and in some cases has not had to consider in its proposal for power plants, such as industry economics, geography, federal and state incentives, tr ansportation systems, ownership structures, foreign competition, profit margins, and customer bases; regulating GHG emissions from the209 manufacturing sector is neither necessary nor sensible at this time, particularly given that so many industries have alre ady been reducing GHG emissions through voluntary and extensive energy efficiency initiatives; imposing uniform GHG standards of performance on other source categories could disadvantage these sectors by making them less competitive on the global stage and will translate into significant job losses and reductions in economic activity without actually reducing GHG emissions.

Response 2 : Comments on electricity price impacts focused on higher estimates of price increases. The comments also mentioned group an d regions where increases may be more onerous. For example, areas with fewer options for alternative energy sources for heating and cooling may be more impacted. People with lower income or who live in more extreme climates may experience greater impacts . Comments expressed concern that home energy prices may be more volatile because of the rule.

Under the Clean Power Plan, states will have the ability to mitigate particular impacts for groups and regions by choosing how to meet the guidelines. In the RIA chapter 3 , the EPA provides estimates of potential re tail electricity price changes

. Because states will ultimately make the decisions as to implementation of the guidelines, the RIA reflects illustrative est imates of price change estimates. These est imates vary by option, region

, and year. In the RIA chapter 3

, national average electricity prices in 2030 are not expected to change o r rise by less than one percent depending upon the control scenario analyzed. Regional estimate s of electricity price changes range from a price decrease of about 10 percent to a price increase of about 6 percent in 2030 depending upon the region of the country

. These estimates are also reported in chapter 3 of the RIA and are comparisons to baseline pr ices that would occur absent the CPP . EPA also estimates the change in electricity bills for consumers taking into consideration potential energy efficiency savings. The national average electricity bill is expected to decrease in 2025 by about 2.7 to 3.8 percent and in 2030 to decrease by 7 to 7.7 percent, again the range depending upon the control scenario analyzed.

Commenters also asserted that increases in natural gas prices will occur because of the CPP and that those increased prices will be a burde n to consumers. In the RIA, natural gas prices are estimated to range from a decrease of about 2 percent to an increase of 2.5 percent in 2030 depending on the illustrative control scenario evaluated. The EPA notes that the EPA estimates of potential price changes in electricity and natural gas are significantly lower than those asserted by the commenters. See Comment 9 in section 8.6 for EPA’s response to comments stating that the CPP will have impacts on low and middle income individuals. Impacts to part icular industrial consumers will depend upon a variety of factors that are discussed in chapter 5 of the RIA. The EPA’s price change estimates are based upon the illustrative control scenarios evaluated by EPA. States will develop implementation plans that may differ from those projected by EPA and states will have the flexibility to consider circumstances and priorities relevant for their particular areas of the country in the development of those implementation plans.

Comment 3: The impact of changes in energy markets are harmful to other markets.210 Commenters discussed impacts to American refineries, manufacturing, other businesses and hardworking American consumers such as less affordable and less reliable energy, loss of jobs, and elimination of fuel diversity. The commenters stated that the proposed EPA rule ignores the successful example of our free market and guarantees adverse consequences for nearly every consumer and business in the U.S. The commenters further stated that the proposed rule threatens our industry's international competitiveness due to higher energy costs.

Commenters stated that EPA fails to use full economy modeling in order to address impacts experience by other industries that rely on coal industries or t he communities supported by coal. The commenters also added that this failure intrudes on states to make its own decisions on the appropriate costs.

Commenters suggested that EPA now claims economic growth does not require commensurate electric energy gro wth despite economic principles and the EPA regulatory impact analysis observations that growth and the availability of electric power in this country has closely paralleled the growth in our economy for decades. The commenters stated that states such as M issouri that still build cars, process or produce aluminum, process meat and lumber, or have other energy intensive industries will be impacted by changes in the electric energy base load. Commenters questioned how a reduction in coal could result in a job growth of 28,000 jobs in the fuel extraction sector in 2020, as estimated by EPA. The commenters suggested that "when the health and welfare of people are adversely affected by the actions of man, some positive action is sometimes justified when very limi ted negative economic activity might occur". However the commenters stated that the rule will result in severe economic hardships the proposed rule will result in job losses in coal mining states based upon unproven theories of climate change and should th erefore not be accepted.

Commenters stated that the GHG ESPS will reduce demand for Indiana coal and result in losses of good paying jobs in rural communities. The commenters stated that manufacturing and agriculture are significant users of electricity in Indiana and will suffer significant losses if the proposed GHG ESPS is promulgated. The commenters stated that manufacturing and agriculture in Indiana are dependent on the low cost of electricity. The commenters stated that state's utility rate forecas ting experts have predicted electrical rates in Indiana will rise by more than 30% over the next decade

- prior to considering the impacts of the GHG ESPS. The commenters cited NERA projections that rates will be 12% more costly each year compared to EPA's projections. The commenters cited an Energy Ventures Analysis prediction that electric rates for industrial customers will increase by 50% by 2020, and natural gas costs in Indiana will increase by 108%.

Commenters stated that foreign direct investment (F DI) has also led to the creation of 2,118 new direct jobs in 2014, or 45 percent of new announced jobs. The commenters stated that this investment will be jeopardized by rising energy costs due to the proposed rule. The commenters stated that they were con cerned both about their ability to attract new businesses, as well as about the ability of current businesses to continue to operate.

Commenters opined that the Administration's actions have already begun affecting Alabamians, and just recently Alabama Po wer cited federal regulations as the impetus behind its decision to alter operations at seven operating units located within three power plants across the state. The commenters stated that as part of these transitions, two coal

- fired units at the Green Cou nty211 Electric Generating Plant will be converted to gas

- powered units, reducing electric generating capacity by a third and eliminating sixty jobs located in the heart of the Black Belt. The commenters stated further that these job losses have serious conse quences in a region which has faced declining populations, high unemployment rates, as well as a host of infrastructure challenges. The commenters stated concern that the EPA's proposal, if finalized, would impose enormous costs and burdens on Alabama work ers and their families, and would hinder our global economic competitiveness. The commenters also stated that the impact will be felt the deepest in
states

- like ours

- where fossil fuels provide a significant share of our electricity generation. The
commente rs also opined that the Administration's claims that energy costs will not be impacted by this proposal ring hollow, and that simple economics suggest that the EPA's plan will undoubtedly increase electricity prices, which will hinder

- not help

- economic gro wth. The commenters stated that Alabama has historically seen lower than average energy costs, in part because our state has been blessed with an abundance of natural resources that can be harnessed to power our homes and businesses and to make life better for our citizens.

Commenters stated that there was potential for the impacts of this rule to cascade through the state's regional economy and impact farmers, regional small businesses and communities hardest of all as these groups have the least market p ower to identify, fund and introduce economically viable solutions and management alternatives in a manner that is both timely and able to offset business, employment and community disruption.

Commenters stated that to cope with the increased energy costs this proposed rule will bring, existing businesses in Terre Haute may layoff employees, move to other states or overseas or shut their doors, and that new businesses may be deterred from coming to Terre Haute, affecting jobs, local tax revenue and the ove rall economic health of Terre Haute.

Commenters stated they are very concerned that the CPP will place a major stumbling block in front of the progress seen in manufacturing and the economy generally over the past few years. The commenters stated that aff ordable and reliable energy supply has lowered costs for businesses and households across the country while spurring economic growth and job creation. The commenters stated that EPA needs to more carefully consider the economic impact of the CPP and the da mage it could do to our ongoing recovery and economic prosperity in the decades
to come.

Commenters stated that EPA should consider the costs to manufacturers, consumers, and the economy against the limited benefits to the environment when proposing rules and regulations. The commenters stated that business and consumers are not opposed to the programs that benefit the environment, but oppose efforts that produce an undue burden on the economy.

Commenters expressed concern that the South Carolina goal of 772 lbs CO2/MWh cannot be achieved solely through renewable generation and EE. The commenters predicted that if under

construction nuclear does not count toward compliance, despite the costs of overcoming current capacity constraints, electricity providers will turn to natural gas

- fired generation as the means of satisfying their obligation to serve and to meet the emission goal. The commenters stated that the capital investments required to plan, site, permit, and build new interstate natural gas pipeline infrastructure will likely displace capital available for renewables and EE, and utilities would pursue the economies of scale of natural gas to the detriment of the other Building Blocks.212 Commenters stated that 100 percent of California, the state from w hich we receive 90 percent of all the fruits and vegetables grown in this country, has been in severe or exceptional drought since May. The commenters stated that the USDA retail price report on fruits and vegetables dated July 25th shows retail prices in June on most items up 11 to 20 percent over a year ago, 33 percent up on plums. The commenters cited NPR reports that the wholesale price of coffee has doubled since January, due in large part to the continuing drought in Brazil and Vietnam.

Commenters stated that the costs utilities will incur in order to comply with the new standards will be passed on to their customers

- in many cases, farmers and ranchers. The commenters stated that farmers and ranchers are price takers and not price makers, so they lack the ability of many other sectors of recouping their costs. The commenters stated that the Proposed Standard will negatively affect all Americans, including farmers and ranchers, who are already committed to producing cleaner, renewable fuels. The com menters stated that farmers and ranchers, and agriculture in general, are particularly disadvantaged, however, because of the energy intensive nature of producing food, feed, and fiber. The commenters stated that the Proposed Standard will increase the cos t of doing business and create very limited environmental benefit. The commenters stated that farmers will not only be impacted by higher electricity and natural gas prices in the future, but will get hit with higher prices for other important inputs. The commenters stated that increases in other energy prices, fertilizer and machinery, will hold negative consequences for agriculture while at the same time making U.S. farmers and ranchers less competitive internationally. The commenters stated that in many cases, higher production costs due to increased energy prices lower net producer returns and farmers will respond by reducing overall production.

Commenters stated that the costs utilities will in incur in order to comply with the new standards will be passed on to their customers including farmers and ranchers. The commenters stated that farmers and ranchers are price takers and lack the ability of many sectors of recouping their costs by passing them on to the customers. The commenters stated that high er energy costs for farmers and ranchers means higher input costs.

Commenters stated that a diverse energy supply keeps energy costs reasonable, which for many farmers competing in a global economy, may mean the difference between success and failure of
t heir livelihoods. The commenters stated that the rule will raise nationwide electricity prices between 6 and 7 percent in 2020 and up to 12 percent in some locations, and annual compliance costs will range from $5.4 to $7.4 billion in 2020, and up to $8.8 billion in 2030. The commenters stated that the costs utilities will incur to comply with the new standards will be passed on to their customers, including farmers. The commenters stated that the rule stands to further burden Michigan residents, especially farmers who may not live in the dense residential areas where utilities often focus programs incentivizing energy efficiency and alternative energy production. The commenters stated that loss of productivity in the vital agricultural sector due to higher energy prices would have a profound impact on Michigan.

Commenters stated that farmers and ranchers are primarily end

- users of the products from power plants and, thus, must completely depend on those who operate and own them. The commenters stated that t he Proposed Standard would cause severe economic hardship not only for Kansas farmers and ranchers but also for our middle

- and low

- income neighbors across the state.213 Commenters cited NERA estimates of increases of twelve percent on delivered electricity prices to Georgia consumers as a result of the proposed rule. The commenters stated that these costs will be passed on to, and farmers have no way to recoup that increase in energy costs.

Commenters stated that the rule will put many farmers in a position to make difficult business decisions and could put some out of business. The commenters stated that EPA's plan would do little to address the problem it seeks to solve (merely reducing fossil fuel emissions without producing a measurable impact on world t emperature or climate) and especially harm the agricultural sector because of the energy

- intensive nature of most types of farming.

Commenters stated that agriculture has been doing its part in supporting energy independence and leading the way to a clean er renewable energy future. The commenters stated that farmer

owned cooperatives and limited liability companies account for nearly half of the ethanol production in the United States and many have made substantial commitments to bio

- energy by investing in ethanol, biodiesel, biomass and advanced biofuels facilities and building additional terminal storage for renewable fuels in strategic geographic locations. The commenters stated that major investments by the agriculture sector also have occurred with the installation of methane digesters and greater use of wind energy, yet the proposed standard will negatively affect all Americans, including farmers and ranchers, who area already committed to producing cleaner, renewable fuels.

Commenters stated that agr iculture is often energy

- intensive and depends on the availability of reliable, affordable energy, and a diverse energy supply keeps energy costs reasonable and reliable. The commenters stated that natural gas is used to power irrigation pumps and in the f

ertilizer used to produce crops; diesel is used in our farm equipment, propane is used to heat poultry and hog houses and to dry corn and soybeans once they have been harvested, and coal is used predominately by electric cooperatives, powering farms, ranch es and communities all across rural America. The commenters stated that policies addressing carbon emissions would have vast, wide

- ranging impacts both on America's farmer cooperatives, particularly food processors and on individual farmers, ranchers and g rowers. The commenters stated that farmer cooperatives and their member

- owners are very concerned that regulatory programs to reduced greenhouse gas emissions will result in higher business costs, especially those related to energy, fuel, and fertilizer an d if increased costs are passed along to the consumer, American agriculture will lose its competitive edge in the global marketplace. The commenters stated that they do not support adopting policies that would impose new costs on U.S. agriculture producers while letting our foreign competitors avoid such costs and believe that farmer cooperatives or their producer

- owners will not continue to receive an affordable and reliable supply of energy.

Commenters stated that by the end of this century, the northeas t region is expected to see an additional 57 days per year, nearly two full months of temperatures over 95 degrees. The commenters stated that agriculture currently employees more people in Pennsylvania than the extraction of coal, oil and gas combined, an d it is projected to suffer from the extreme heat, droughts and storms and can shed many thousands of jobs.

Commenters stated that Americans will be hit repeatedly with higher prices as businesses pass higher costs onto consumers. The commenters stated th at if a company had to absorb the costs, high energy costs would shrink profit margins and prevent businesses from investing and214 expanding. The commenters stated that cutbacks result in less output, fewer new jobs, and less income. The commenters stated th at the impact of a revenue

- neutral carbon tax starting at $37 per ton in 2015 through 2030 would be substantial, including an average employment shortfall of nearly 300,000 jobs; a peak employment shortfall of more than 1 million jobs; 500,000 jobs lost in manufacturing; an aggregate GDP loss of more than $2.5 trillion (inflation

- adjusted); and a total income loss of more than $7,000 per person (inflation

- adjusted). The commenters stated that the Energy Information Administration (EIA) has analyzed the econ omic impact of a $25/ton carbon tax using essentially the same model and found more than $2 trillion in lost GDP from 2014 to 2030 and a peak employment differential of 1 million lost jobs.

Commenters stated that manufacturers rely on secure and affordabl e energy to compete in a tough global economy, and that manufacturers' recent gains are largely due to the abundance of affordable energy we now enjoy. The commenters stated that manufacturers across CSX's 23

- state network, have invested more than $14 bil lion in rail

- served facilities, creating more than 14,000 jobs over the last five years. The commenters stated that in 2013, $3 billion in customer investments generated more than 1,600 new job opportunities. The commenters stated that economic productivit y and environmental progress could be undermined by the Proposed Rule and EPA's failure to analyze foreseeable economic impacts.

Commenters stated that the proposed rule will severely impact coal industry members, workers in allied industries such as rail transportation, equipment sales and manufacturing, and the communities where those activities are located. The commenters stated that this regulation will put Colorado citizens at risk for lost jobs and higher electricity costs. The commenters stated that by reducing the U.S. fleet of coal

- fired generating units by more than one

- third by 2020, the regulation will place U. S. consumers at risk of "rolling blackouts" and service disruptions.

Commenters stated that the CPP will drive manufacturing and jobs out of state and overseas. The commenters stated that the proposed rule will impose costs on U.S. businesses in numerous ways without meaningfully reducing global GHG emissions.

Commenters stated that the cost estimates fail to reflect or capture the subs equent adverse spillover impacts of higher electricity rates on our nation's overall economic activity. The commenters cited an analysis by NERA Economic Consulting indicating that average U.S. electricity prices would increase by 12% per year and the tota l costs of the rule could be between $366 billion and $479 billion over a 15

- year timeframe

. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy consumers. The commenters stated that high er energy prices disproportionately harm low

- income and middle

- income families. The commenters stated that the Proposed Rule would result in a direct loss of 52,000 jobs in the electric utility, mining and rail sectors due to plant closures. The
commenters stated that an additional 100,000 indirect jobs are at risk for loss in communities affected by the closures, and that job losses would be concentrated in, "relatively poor, rural areas that are least able to afford the loss of high

- wage skilled jobs."

C ommenters stated that water and wastewater utilities consume at least 1.8% of electricity nationwide and will face at least $414 million in increased electricity costs by 2020 due to the CPP. The commenters stated that an increase in the cost of electricit y to water utilities from the CPP means that fewer funds will be available for other high priority activities (such as215 infrastructure repair) and/or that water and wastewater rates and charges will need to increase to offset the increased power cost. The c ommenters stated that a win

- win scenario of reducing the financial challenges and furthering the overall goals of the CPP can be achieved by encouraging states to offer financial assistance/incentives to the water sector.
Commenters stated that the SPP region has spent in excess of $8 billion on transmission investments, of which Kansas electric customers are paying for approximately 20 percent, and that these investments may not have been needed based on where SPP's projec ted new 10,100 MWs of generation are located, but that Kansas' ratepayers will still be required to pay for these investments regardless of whether they are needed in the future. The commenters stated that the KCC can address cross

- subsidy issues within th e context of setting rates for a single utility but the state

- wide emissions guideline will create cross

- subsidy issues between the customers of separate utilities. The commenters stated that the Clean Power Plan identifies the specific utilities who own t he affected EGUs, but does not address how a state should determine which utilities will build new NGCC or renewable energy, nor does the plan identify what DSM energy efficiency programs should be used. The commenters stated that the KCC does not have
sta tutory authority to allocate the costs associated with the Clean Power Plan to all ratepayers in Kansas because a large number of utilities are not rate

- regulated by the KCC. The commenters stated that if a non

- jurisdictional utility does not agree to a co mpliance plan, the KCC would be forced to require jurisdictional utilities to take additional measures to meet the overall emissions guideline and subsidize the costs of compliance for non

- jurisdictional ratepayers. The commenters stated that the EPA has c reated a high likelihood that cross

- subsidization will occur between ratepayers of the utilities in the state and that this concern carries over to the EPA's proposed multi

- state option. The commenters stated that the average cost for Kansas consumers wil l still increase as other states move to a more expensive generation mix and that this subsidy will be exacerbated because Kansas' coal units have been retrofitted with pollution controls and may remain in service for an extended period. The commenters sta ted that the EPA does not define how a determination would be made as to which states should be held accountable should the multi

- state plan fail to achieve the region's target emission rate. The commenters stated that the CPP, creates significant reliabil ity issues within Kansas and the SPP region and that a market

- based approach will interject too much uncertainty and risk into the planning process used to determine new generation and transmission projects. The commenters stated that Cap and Trade program s are subject to changes in the market structure and that it does not believe that a market

- based approach

- such as a Cap and Trade Program

- is an appropriate mechanism to achieve the significant emission reductions necessary under the CPP, as proposed. The commenters stated that it is also possible that the market price of emission limits could escalate to a high enough level that certain EGUs would become uneconomic overnight, and that this situation could lead to the need for new generation and transmi ssion investment, stranded costs, and reliability issues.

Commenters stated that the system operator generally utilizes a bid

- based merit order to dispatch generation

- that is, supply resources such as power plants submit economic offers which the system operator uses to commit and dispatch particular resources from least cost to more expensive in sufficient quantities to meet electricity demand, subject to out of merit adjustments for reliability based on system and security constraints. The commenters s tated that RTO/ISO footprints often cross but do not always comport with state boundaries. The commenters stated that in some cases one state may have two RTOs/ISOs located within it (e.g., Illinois), only parts216 of some states may be in a RTO/ISO (e.g. Ken tucky and North Carolina), and even what appear to be single state RTOs/ISOs (e.g., California and New York ISOs) rely on exports and imports of power which flow across state lines. The commenters stated that each state will be assigned varying emissions t argets notwithstanding the substantial interstate nature of regional wholesale power markets, and unless regional coordination among states is encouraged and facilitated with enough time for implementation, there may be unintended market consequences and p otentially costly inefficient market incentives with respect to how power plants are dispatched. The commenters stated that facilitating regional cooperation will allow for the continued co

optimization of cost and reliability that is central to the organi zed markets that have served customers well.

Commenters stated that forest products facilities are energy

- intensive and operate in a highly competitive global market, face fierce international competition, and cannot automatically pass on higher raw mater ial and energy costs to consumers and still remain competitive. The commenters stated that increased costs will adversely affect U.S. forestry products' global competitiveness, and the jobs and other economic and social benefits they provide for their

comm unities. The commenters stated that European nations and others fully recognize bioenergy as carbon neutral in their GHG reduction schemes, highlighting the adverse competitiveness impacts of the uncertainty around biogenic emissions.

Commenters stated th at the rule presents a significant threat to American jobs and the economy. The commenters stated that increases in electricity costs will place an immense burden on U.S. businesses for which affordable energy provides a critical operating advantage in com petitive global markets.

Commenters stated that the effective ban on coal

- based power will cause the loss of thousands of jobs, directly and indirectly. The commenters stated that in order to absorb higher electricity costs, businesses will be forced to r educe their workforce and increase the prices of their products, leading to an overall rise in the cost of living. The commenters stated that the potential combination of price increases and job losses constitutes an unacceptable hardship for Georgia famil ies. The commenters stated that relying on less fuel sources is a grave threat to our grid security. The commenters stated that effectively eliminating coal from our energy portfolio will impede global competitiveness.

Commenters stated that the delivery of reliable, affordable and environmentally responsible energy services to our customers, with the explicit recognition that our energy intensive industrial customers need to remain cost competitive in international markets, is a key tenant to the economi c vitality of its region. The commenters stated that more than half of Minnesota Power's electric output is consumed by thirteen large energy

- intensive customers, chiefly in the iron mining sector.

Commenters cited a National Association of Manufacturers estimate that the EPA rule could single

- handedly eliminate the U.S. competitive advantage over foreign competitors by removing reliable and abundant sources of energy from our nation's energy mix.

Commenters stated that the U.S. should not risk rising ele ctricity prices and diminished fuel diversity in the absence of legally binding commitments from China, India, and other major217 developing nations. Commenters stated doing so would increase domestic job losses and accelerate off

- shoring of energy

- sensitive industries.

Commenters stated that EPA estimates do not capture the subsequent spillover impacts of higher electricity rates on overall economic activity. The commenters stated that these increases will place an immense burden on U.S. businesses, and coul d eliminate the critical competitive advantage that affordable and reliable electricity provides to the American economy. The commenters stated that the United Mine Workers Association has estimated that the rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020, and cumulative wage and benefit losses from these sectors of $208 billion between 2015 and 2035.

Commenters stated that lacking competitive, stable electricity prices, manufacturers and busines ses will be driven offshore or out of business. The commenters stated that if industry is driven away from the U.S. due to EPA regulations, it will likely be to countries with cheaper energy, lower labor costs, and less stringent environmental requirement s and thus will have the unintended and ironic consequence of raising global carbon emissions and overall emissions. The commenters cited Philip Moeller, that EPA is essentially capping the amount of national electricity consumption in 2030. The commenter s stated that the impacts of carbon reduction policies in other advanced economies around the world including Australia and Europe caused economic harm and job loss from excessive regulations.

Commenters stated that U.S.

- based energy intensive industries may be less competitive, and growth in those industries would be encouraged outside the U.S. The commenters stated that if coal consumption in the USA decreases, then coal pricing is likely to follow, making U.S. coal more economically attractive by world standards. The commenters stated that without specific restrictions, this coal will likely be exported and the goal of reducing the coal usage by U.S. utilities will produce little net benefit for GHG emissions on a worldwide basis. The commenters stated that EPA should allow and encourage states to take GHG leakage concepts into account when developing their State Implementation Plans (SIPs) to adjust reduction targets when they would impose an undue cost burden on Energy Intensive Trade Exposed (EITE)

co mpanies.

Commenters stated that the CPP will diminish our global competiveness. The commenters stated that regulations such as this proposal threaten to remove this competitive advantage by restricting the available energy sources. The commenters stated t hat as energy prices become more volatile and reliability diminishes, U.S. firms will be less competitive, and those firms looking for a new home in the U.S. will look elsewhere. The commenters stated that the proposal is unlawful and will be detrimental to the Nation and the State of Wisconsin, particularly to our manufacturing industries.

Commenters stated that increased electricity and natural gas prices will decrease manufacturing competitiveness, increase the competitive advantage of our offshore com petitors, decrease U.S. jobs, increase imported manufactured goods and cause a larger trade deficit. The commenters stated that the shifting of manufacturing jobs offshore and to countries that have less stringent laws and regulations governing the emissio ns of greenhouse gases and other pollutants entails the deterioration of domestic employment and economic activity, as well as increased overall emissions worldwide.218 Commenters stated that a number of foreign steel producers are receiving below market rate s for electricity purchases, and above market rates for excess electricity sales, which constitute a subsidy. The commenters stated that policies that raise energy costs on domestic companies threaten the competitiveness of the steel industry, which operat es in the U.S. under tight margins with substantial subsidized competition from overseas.

Commenters stated that it competes in global markets, and its U.S. manufacturing base depends on various strategies to control costs, including energy costs. The com menters stated that low relative energy costs are a critical element for the global competitiveness of U.S. manufacturers, and that significant energy cost increases would put domestic manufacturing at a competitive disadvantage relative to competitors in other countries. The commenters stated that the proposed rule would increase both electricity and natural gas costs for manufacturing operations and that independent analysis suggests that EPA has underestimated the projected costs.

Commenters stated that the proposed rule is designed to drive 115,000 MW of coal

- fired electricity generating capacity into retirement by 2030. The commenters cited a study that indicated that due only to the projected retirements in coal

- fired electricity generating capacity within the next decade electricity prices would rise in the range of 16

- 28%. The commenters stated that the electricity and related price increases resulting from the proposed rule will severely disadvantage energy intensive, trade

- exposed industries that operate in the US such as primary aluminum production. The commenters stated that electricity accounts for approximately one third of the input costs for primary aluminum and increases in electricity cost and uncertainty regarding the future supply and pre dictable cost of electricity arising from the proposed rule will fundamentally affect the business prospects for US aluminum smelting. The commenters stated that much of the shuttered US production has been supplanted globally by new production capacity ad ded in China that is powered by coal

- fired electricity generation and this rule will likely further exacerbate that trend.

Commenters cited EVA that by 2020 these regulations, along with other changes in energy prices, will increase residential electrici ty and natural gas costs by 27 and 50 percent, respectively, from a 2012 baseline. The commenters stated that EVA expects the average electricity rate for industrial power to increase from 6.7 cents in 2012 to 10.5 cents in 2020, an increase of 56 percent. The commenters stated that such cost increases would put American goods and services at even greater competitive disadvantage, and that if electricity rates become too high, businesses with operations in the U.S. could conceivably relocate to other countr ies in the world with more affordable electricity rates.

Commenters stated that one important effect of regulating carbon emissions is that energy

intensive industries will move to countries where carbon emissions are not regulated and the price of energy is lower. The commenters stated that this migration away from the United States, known as "carbon leakage," results in both a drain on the United States economy and a reduction in the rule's projected carbon benefits. The commenters stated that EPA's cost

- benefit analysis fails entirely to take carbon leakage into account. The commenters stated that carbon leakage is not limited to electricity generators, and that raising the cost of energy by regulating power plants puts pressure on energy

- intensive indus tries

- not just energy generators

- to move overseas where energy is cheaper.2 19 Commenters stated that if EPA adopts policies that substantially increase the cost of energy, thereby, decreasing the competitiveness of United States industries, investments and e missions will be sent to other, less efficient countries with higher CO2 emissions intensities. The commenters stated that overly restrictive and costly United States policies to reduce emissions will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions.

Commenters stated that if regulations such as the Proposed Rule force energy options off the table, such as by the forced early retirement of coal

- fired power plants, e nergy prices will become more volatile, costs will increase, reliability will be threatened and ultimately U.S. firms and facilities such as NYS and NYS will be less competitive. The commenters stated that this will negatively affect the ability of America n manufacturers to sell their products in foreign countries, and also give foreign imports further unfair advantages in the U.S. market. The commenters stated that if the Administration adopts policies that substantially increase the cost of energy

- there by decreasing the competitiveness of U.S. industries

- investments and emissions will be sent to other, less efficient countries with higher CO2 emission intensities. The commenters stated that, overly restrictive and costly U.S. policies to reduce emissio ns will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions.

Commenters stated that the EPA should consider a reasonable path forward that does not exceed EPA's statu tory authority, that supports American jobs and the economy, that maintains electric reliability, that does not place American industry at a competitive disadvantage with industry in other countries, that is based on a realistic global plan that is practic ally enforceable, and that allows all our energy sources to play in a role in America's energy future while maintaining America's low cost energy competitive advantage. The commenters stated that NSA and NYS produce steel with much lower emission rates per unit of output, including for greenhouse gases, than many other integrated domestic and foreign steel mills, including Chinese, Russian and Indian steel mills.

Commenters stated that because Texas businesses compete on a global scale, rising electricity prices resulting from the proposed standards will place the state, and the nation, at a disadvantage globally. The commenters stated that some businesses would choose to move overseas, taking their emissions

- which will be less controlled or uncontrolled altogether

- and their jobs with them.

Commenters stated that since energy is commonly one of the highest costs and key inputs to energy intensive industrial companies, any regulation which increases electricity prices while reducing electricity reliabili ty will necessarily harm the international competitiveness of U.S. industry and ultimately cost good, family sustaining jobs.

Commenters stated that compliance with the proposed rule will significantly increase the cost of producing manufactured goods in the US, make US manufacturers less competitive with foreign manufacturers, and result in loss of American jobs. The commenters cited Energy Ventures Analysis findings of many flaws in EPA's underlying assumptions about power plant process efficiency improv ements, non

- hydro renewable energy expansion and rapid growth in consumer energy efficiency that were used to calculate state emission rate limitations. The commenters220 stated that EVA also found that EPA's assumptions are contrary to power industry practic es and outside projections by the U.S Department of Energy (DOE) and other independent forecasts.

Commenters stated that the Clean Power Plan does not address the leakage problem, that higher energy rates lead to higher production costs and most industrie s cannot easily pass along those higher costs to their customers; thus making US industries less competitive and vulnerable to foreign competition. The commenters stated that the EPA's plan would make it economically infeasible for numerous businesses to r emain in the US; thus causing potential massive job dislocation. The commenters stated that the evidence points to regulations that were drafted by wealthy climate activists and special interest groups without regard for the impact these over

zealous regul ations would have on American families and businesses. The commenters stated that there does not appear to be a scientific

- based justification for the EPA's 30% CO 2 reduction proposal.

Commenters stated that if the CPP is adopted the substantial increase in the cost of energy could threaten the competitiveness of American manufacturing, and the result would be an incentive for manufacturing investment, and associated CO 2 emissions will migrate to other, less efficient countries with higher CO 2 emissions in tensities. The commenters stated that overly restrictive and costly U.S. policies to reduce emissions will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions.

Commen ters stated that the manufacturing sector consumes 26% of U.S. electricity and 29% of U.S. natural gas, and requires affordable energy prices to compete with global competition, create jobs, and to generate economic growth. The commenters stated that as el ectricity and natural gas prices rise, manufacturing facilities move overseas to remain competitive. The commenters stated that jobs as well as GHG also move overseas, referred to as "GHG leakage." The commenters stated that by creating such a costly and b urdensome regulation, the EPA will effectively send U.S. jobs overseas thus causing GHG to instead migrate. The commenters stated that unless the measures set forth in the CPP are addressed and actually implemented with consideration of potential internati onal impacts, all that the CPP will accomplish is to harm the U.S. economy by causing job losses or job relocations and increased overall emissions.

Commenters stated that because the costs of doing business in the United States will be expensive, domesti c investment is discouraged while investment in developing countries is encouraged. The commenters stated that while the United States may demonstrate its leadership by reducing our nation's impact on climate change, the price we would pay would be enormou s.
Commenters stated that the CPP might make the cost of doing business in the U.S. so high that companies move their operations overseas to countries with fewer environmental regulations than the U.S. The commenters stated that EPA does no analysis to ac count for potential economic "leakage" that may occur as a result of the CPP and the Agency's assessment of the CPP's effect on emissions is incomplete and hopelessly optimistic. The commenters cited the Maguire Energy Institute that regulatory burdens of this sort imposed on energy prices and energy supply cause plant closures and maximize the potential that manufacturing jobs will move overseas. The commenters cited the International Energy Agency that such leakage can result in the increase in emissions outside a region as a direct result of the policy to cap emission in this region.221 Commenters stated that regulating GHG emissions from the manufacturing sector is neither necessary nor sensible at this time, particularly given that so many industries have already been reducing GHG emissions through voluntary and extensive energy efficie ncy initiatives. The commenters stated that imposing uniform GHG standards of performance on non

- EGU source categories could disadvantage these sectors by making them less competitive on the global stage. The commenters stated that new regulations with hig h compliance costs that do not account for trade exposure will translate into significant job losses and reductions in economic activity without actually reducing GHG emissions.

Commenters stated that U.S. industries are some of the most efficient in the world both in terms of energy use and GHG emissions and that in 2010, the GHG emission intensity of the U.S. economy, measured by total carbon dioxide emissions divided by GDP, was 31 percent below the worldwide average and 67 percent below that of nations that are not part of the Organization for Economic Cooperation and Development. The commenters stated that based on current projections, worldwide energy

- related CO2 emissions will rise approximately 20 percent by 2035 while U.S. emissions are projected t o be relatively flat; thus, the carbon intensity of the U.S. economy is set to drop even further when compared to worldwide averages and non

- OECD nations. The commenters stated that if the Administration adopts policies that substantially increase the cost of energy

- thereby decreasing the competitiveness of U.S. industries

- investments and emissions will be sent to other, less efficient countries with higher CO2 emissions intensities and, as a result, overly restrictive and costly U.S. policies to reduce emissions will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions. The commenters recommended that a more effective policy approach for lowering global GHG concentra tions would be to promote

on

- shoring of jobs and production from more carbon intensive countries to the less carbon intensive U.S. economy.

Commenters stated that a report by NERA Economic Consulting estimates that the combined effects of the CPP's comple te overhaul of Indiana's electricity generation mix will be double

digit rate hikes, even assuming the Agency's assumptions about each individual component of the CPP are indeed accurate. The commenters also stated that Indiana manufacturers rely on low

co st electricity to stay competitive, and the CPP will likely result in layoffs, plant closures, and reduced economic competitiveness. The commenters stated that as Indiana Department of Environmental Management Commissioner Tom Easterly has testified before the U.S. Congress, plant closures will lead to Indiana's manufacturing activity being relocated overseas. The commenters concluded that because other countries operate less efficiently than the U.S., the net effect of this shift will be an overall increas e in carbon pollution as foreign

- manufactured goods are transported back to the United States.

Commenters believed EPA completely overlooks that if we don't use our own coal, other countries will and that the proposed CPP would sound a death knell for coa l

- fired power plants in the U.S. However, the commenters stated that this does not mean the coal will stay in the ground; instead of selling it to U.S. utilities, coal producers will simply export their product to foreign countries, where demand for energy is at an all

- time high. The commenters explained that U.S. coal exports increased by more than 60 percent from 2005 to 2011, and that percentage is only expected to increase as energy

- hungry countries around the world grow at a rapid pace. The commenters noted that many of the countries buying our coal have far less stringent222 environmental regulations than the U.S. The Clean Power Plan will cause more coal to be shipped to these countries

- ironically resulting in more air pollution, not less.

Furthermore , commenters believed that because so many manufacturers compete on a global scale, the electricity and related price increases resulting from EPA's rule could be particularly harmful to Ohio's energy intensive, trade

- exposed industries. Commenter stated s uch circumstances may not actually serve to reduce carbon emissions, but instead simply move them to other countries that have not implemented similar restrictions.

Commenters stated "The scientifically flawed SCC computational process attempts to compute the future global warming damage to the entire world

- wide population that would be avoided by each ton of CO 2 not emitted by U.S. sources and count that highly uncertain world

- wide avoided damage as a benefit of the regulation. But the SCC cost/benefit an alysis only burdens the U.S. economy and population (not the entire world) with the immediate cost impacts from issuance of the regulations. This will result in much higher US energy costs and loss of jobs to other countries with lower coal

- produced energy costs that do not choose to bear the burden of CO2 emissions control."

Commenters stated that EPA's projections likely understate the significance of the price increases associated with the rule. The commenters stated that even without considering costs associated with transmission upgrades and natural gas infrastructure upgrades, ERCOT has projected that electricity costs to consumers may increase by as much as 20%. The commenters stated that the manufacturing and industrial sectors may face significant price increases both in electricity and in other necessary feedstocks, making them vulnerable to international competition. The commenters stated that the impact of the proposed rule is further exacerbated for industrial sectors that, in addition to bein g energy intensive, are also trade exposed, that face stiff competition from overseas. The commenters stated that actions that adversely affect the competitiveness of trade exposed industries are also inconsistent with broader policy priorities to increas e exports and attract foreign direct investment. The commenters stated that a regulation that reduces demand for coal by 25% or more will have a similar effect on petroleum coke, and petroleum coke

- producers will be harmed both by the lack of demand for p etroleum coke and by the accompanying price reduction that will result from oversupply. The commenters stated that for many industries reliable electricity is an absolute business necessity and electricity outages cannot be tolerated, thus they will have to develop contingency plans to prepare for that potential. The commenters stated that such plans

- and the necessary investments in alterative electricity supply options

- will also prove costly and add to the economic harm that the proposed rule would ca use if finalized. The commenters stated that it would be harmed if EPA adopts a portfolio approach that allows States to directly regulate entities other than affected EGUs. The commenters urged EPA to discourage States from relying on mandatory energy ef ficiency programs aimed solely at industrial facilities in their implementation plans.

Commenters were concerned that this proposal, if finalized, will directly increase its operating costs and shift its capital planning away from spending on projects tha t will grow its business.

Commenters cited Cleveland State University's Center for Economic Development and Energy Policy Center analysis indicating that electricity price had a statistically significant negative effect on manufacturing productivity across the states from 1990 to 2010, leading to the223 conclusion that higher industrial electricity rates in Ohio will most likely be associated with lower manufacturing productivity. The commenters stated concerns about how far components of this plan, such as EE requirements, will impact manufacturing let alone the impact increased costs of electricity will have on an already strained industry. The commenters stated that the costs of discovering and implementing EE programs at large manufacturing and industrial f

acilities can be substantial. The commenters stated that EPA is attempting to forever change the landscape of how EE programs are implemented, turning it into a federally enforceable program with arbitrary approval mechanisms.

Commenters stated that in or der to meet the 2020 targets, utilities will be forced to accelerate plans to retire certain coal

- fired EGUs before the end of their remaining useful life and will have to accelerate plans to construct alternative generating capacity to replace them. The c ommenters stated that the proposal would force the rapid acceleration of coal

- fired EGUs retirements, costing billions of dollars more than any retirement schedule based on the actual remaining useful life of the coal

- fired EGUs. The commenters stated that he projected costs of this rule

- along with the multitude of other rules recently issued by EPA

- pose a significant risk to the future of industrial sectors. The commenters stated that energy intensive, trade exposed industries including chemical, plast ics, steel, iron ore, aluminum, paper, food and beverage, nitrogen fertilizer, glass, industrial gases, oil refining, and cement consume 80% of all energy within manufacturing sector and 15.8% of overall U.S. energy consumption. The commenters stated that manufacturing consumes 29% of U.S. natural gas and will also be directly harmed if, as EPA projects, increased use of natural gas for electricity generation raises the price for natural gas. The commenters stated that if the costs of implementation negativ ely affect the competitiveness of trade exposed U.S. industrial and manufacturing sectors, emissions will simply shift to foreign countries where there may be even fewer environmental controls and less efficient use of energy. The commenters stated that th e rule could increase, rather than decrease overall GHG emissions.

Commenters stated that in Texas, the state will have to rely nearly exclusively on Building Blocks 1 and 2 because the potential for increases use of renewable energy is limited by the

nece ssary availability of back

- up natural gas generation. The commenters cited a NERA estimate that electricity rates for industrial users would rise by about 22 percent.

Commenters stated that the proposed rule will increase demand for natural gas in a relati vely short period of time, threatening the shale gas portion of the promise of a U.S. manufacturing renaissance. The commenters stated that the proposed rule poses a significant risk to the continued shale gas stimulus of the U.S. manufacturing sector, and recommended that it be improved such that U.S. manufacturing is not disadvantaged. The commenters stated the rule will have a detrimental impact on the U.S. manufacturing renaissance by increasing the demand for natural gas at the same time when supplies are most likely to be constrained because of increased industrial demand, and believe that this will result in price increases and greater volatility that will hurt energy

- intensive, trade

- exposed manufacturers.

Commenters expressed concern that the CPP w ill lead to higher costs of electricity to large industrial customers like steel, while potentially lessening the quality and reliability of the electric supply that is essential for the steel industry to operate and succeed. The commenters stated that the CPP will have a disproportionate impact on coal

- fired utilities, and there is a high224 correlation between the service areas of those utilities and the location of steel production facilities.

Commenters cited the EIA that the most natural gas

- intensive ind ustries are food, paper, bulk chemicals, and glass. The commenters cited studies showing evidence of a straightforward production decline when natural gas prices to the bulk chemicals industry increase, but finding that the relationship does not appear to apply to the less natural gas

- intensive cement industry. The commenters stated that EPA did not attempt to quantify the potentially largest cost impact of the proposed rule. The commenters stated that it appears that EPA attributed no quantifiable
costs to markets outside the electricity sector.

Commenters stated that potentially higher energy costs and challenges to the reliability of consistent energy supply arising out of the proposed rule's inappropriate constraints on the utility sector's choice of fue l and design will injure the members of both the utility and refining sectors. The commenters stated that in order to provide the nation critical fuels, petroleum products, and chemicals in a cost

- effective manner, access to reliable and affordable energy is critical.

Commenters stated that manufacturing facilities that are reliant on the electrical grid will be affected if the rule is adopted due to impacts on the price of electricity, potential interruptions in service, and increased prices of fuel and ot her manufacturing inputs that also are affected negatively by the proposed EGU NSPS.

Commenters stated that the rule presents a significant threat to American jobs and the economy, and that electricity price increases will place an immense burden on U.S. businesses for which affordable energy provides a critical operating advantage in competitive global markets, particularly energy

- intensive and trade

- exposed industries.

Commenters stated that forcing the closure of coal

- fired power plants will also put up ward pressure on domestic natural gas prices, hurting the influx of energy

- intensive and manufacturing companies that have come to the United States as a result of the shale gas boom.

Commenters stated that the Kentucky Energy and Environment Cabinet has p rojected that a 10 percent increase in Kentucky electricity prices could result in a $2 billion decrease in state GDP and significant job loss in the mining and energy

- sensitive manufacturing sectors. The commenters stated that "levelization" of the origi nal target to increase its stringency would disregard EPA's prior assessment of reasonably available reductions and saddle the state's residents and businesses with a tremendous economic burden.

Commenters stated that the CPP has serious implications for t he manufacturing sector and particularly for those energy intensive industries such as forest products, chemicals, metals, minerals processing, food processors, pulp and paper, brick and refining. The commenters stated that for these industries, energy cos ts can represent up to 80% of operating costs, which means that relatively small increases to energy costs can have significant impacts on the ability to compete and retain or increase jobs and investment

. Commenters stated that estimated compliance costs, which it believes to be unrealistically low, will certainly be passed down to retail electricity consumers, and directly create economic hardships for individuals and companies alike, such as ready mixed concrete producers. The225 commenters stated that the estimated 9% decrease in 2030 is merely based on unfounded assumptions that energy efficiency increases will eventually offset increases in energy prices, due to less energy use. The commenters stated that when taking into consideration the energy cost inc reases stemming from the proposal, the cost of purchasing and mixing key ingredients for ready mixed concrete will be inevitably higher and will result in staggering and unnecessary overall price increases. The commenters cited a November 2014 study that found that the cost of electricity and gas prices for households will actually increase by 35% between 2012 and 2020, instead of EPA's estimated 4% to 7%. The commenters stated that for industry the increase is 92% from 2012 to 2020. The commenters stated that EPA has not adequately determined how the proposal will impact the electric utility sector, and thus the American public.

Commenters stated that EPA's proposed Minnesota CPP target would shift increasing demand on natural gas and renewable based elec tric generation, creating a primary cost impact on commercial and industrial customers. The commenters stated that Minnesota businesses use natural gas for process and energy needs. The commenters stated that EPA must consider and allow maximum compliance flexibility, assure cost effectiveness, allow Minnesota businesses to compete nationally and globally and ensure that Minnesota jobs and the state economy are protected.

Commenters stated that the proposed rule will result in substantially higher energy prices and weaken the reliability of energy supplies and higher energy costs will impact U.S. forgers' global competitiveness disproportionately. The commenters cited an analysis by NERA Economic Consulting indicated that average U.S. electricity prices wo uld increase by 12% per year and the total costs of the rule could be between $366 billion to $479 billion over a 15 year timeframe. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy co nsumers who will not only pay more for energy but also could be forced to purchase new equipment. The commenters stated that the same study predicts an overall increase in natural gas prices as high as 29%, which would harm the forging industry disproporti onately. The commenters stated that that higher energy costs will negatively impact the cost of other raw materials used in forging, such as steel and aluminum, which are also
energy

- intensive products.

Commenters stated that the proposed rule will resul t in energy rationing, pitting power plants against refineries, chemical plants, and paper mills, for the ability to operate when coming up against EPA's emissions requirements. The commenters stated that eliminating access to abundant, affordable power pu ts U.S. manufacturing at a competitive disadvantage.

Commenters stated that the key to sustaining this continued growth in the manufacturing sector in West Virginia is access to dependable and low

- cost energy. The commenters stated that the EPA's plan to limit carbon emissions from new and existing power plants severely jeopardizes manufacturers' ability to reap the advantages of coal. The commenters stated that the proposed standards are unnecessary, not technologically attainable, and will cause operati ng costs will rise, putting manufacturing jobs, investment, and associated economic growth in West Virginia on the line.

Commenters stated that industrials consume nearly half of the electricity in Indiana and the cost of electricity is a major component in the cost of production. The commenters stated that226 industrial businesses in Indiana, moreover, operate in intensely competitive national and global markets. The commenters stated that the cost of electricity, consequently, has a strong and direct impac t on economic conditions and growth opportunities in Indiana. The commenters stated that from 2003 to 2013, Indiana's industrial electricity prices increased by nearly 70%. The commenters stated that the price impact of the proposed new regulations will hi t Indiana industrials on top of the 30% increase already projected for the next ten years. The commenters stated that over 85% of Indiana's total generation in 2012 came from coal

- fired units and the economic impact of the proposed regulations will fall mu ch heavier on Indiana than other states that have less dependence on coal generation. The commenters stated that the market could well experience price impacts exceeding the projections for increased utilization of natural gas for electric generation. The commenters stated that industrial operations rely on cost

- effective supplies of natural gas as well as electricity, and therefore the price impacts on both are important to industrial productivity and growth.

Commenters stated that they, along with other large commercial printing companies, are in an
energy

- intensive business and changes in the energy marketplace have a disproportional impact on our company; in 2013, they consumed 1,479,360,850 kWh at a cost of $110 million. The commenters stated that if, as EPA has projected, that the proposed rule will increase electricity prices by as much as seven percent, they are likely to face at least that cost increase, since many of its facilities operate 24 hours a day/seven days a week and, therefore, they consu me a very high percentage of coal

- fired baseload energy compared to the typical energy user. The commenters stated that even if their costs are limited to the seven percent average predicted by EPA, the rule will cost them nearly $8 million/year, which wil l be on top of other increased costs as utilities work to comply with numerous environmental regulations both at the national and state levels. The commenters stated that these substantial energy cost increases will have a tremendous impact on their abilit y to maintain and grow our U.S.

- based business and related American job opportunities. The commenters stated that this is especially true because of the very low margins in the printing industry and, therefore, its inability to maintain or grow operation s while absorbing significant additional operational costs; moreover, unlike many other industries, printing companies simply cannot off

- shore energy

- intensive manufacturing operations while keeping less energy

- intensive service operations in the United St ates. According to the commenters, the logistics of shipping printed products back to the United States from another country creates delivery delays that our customers simply will not accept. The commenters stated that the proposed rule will drive more pub lishers and marketers to other digital options and away from print; thus, carbon reductions will occur but at the expense of an industry that accounts for over $1 trillion of U.S. economic activity and provides over 8 million American jobs.

Commenters st ated that manufacturing accounts for 12.6 percent of jobs and 17.1 percent of the Gross State Product in Ohio

. The commenters stated that the proposed regulations will have a negative impact on manufacturers. The commenters stated that accelerating the ret irement of coal

- fired power plants will increase the burden on, and costs for, electric generating industries and these costs will be passed on to manufacturers, effectively increasing their cost of doing business and forcing them to pass these regulatory costs to consumers.

Commenters stated that after closely reviewing the proposed rule, they are significantly concerned about the economic harm for negligible environmental benefit of the proposed rules227 that it will face as a result of the arbitrary and ca pricious nature of this proposed rulemaking. The commenters remarked that the proposed rules, if implemented, will result in more costly, less reliable and less secure energy that is so vital to the safe and dependable operations of Marathon Petroleum and our nation's economy. Commenters also stated that their petroleum

- based business will be facing the loss of product markets, increased electricity and natural gas costs, and potential transportation fuel production disruptions as a result of this regulatio n. The commenters noted that their business manufactures products for sale to existing EGUs and will be directly harmed by a decrease in coal

- fired EGU generation. The commenters also noted that they are a large consumer of electricity, and last year paid approximately $400 million for electricity. The commenters cited EPA projections that the rule will increase electricity prices by as much as 7 percent (79 Fed. Reg. at 34,934); however, the commenters remarked that analysis by IECA and others project much higher costs: EPA's proposed guidelines will likely increase electricity costs significantly. The commenters suggested that as a result, implementation of these guidelines will increase the costs of manufacturing transportation fuels which will directly i mpact their ability to compete in the refining sector. Additionally, the commenters stated they own and operate an existing combined heat and power (CHP) unit that will be directly impacted by this EPA action as an affected EGU. Lastly, the commenters stat ed that EPA background support materials and third party analysis provide that there will be increased risk to the reliability of the electric grid, and increased electric power outages have adverse impacts on petroleum manufacturing operations. The commen ters explained that the unplanned electrical outages can lead to interrupted operations which can lead to supply disruptions, and unplanned power outages at refineries can also result in increased emissions, as well as create other potentially dangerous sa fety hazards. The commenters stated that increasing costs of electricity, natural gas and spending more to be able to run out refineries after unplanned shutdowns translates into increasing manufacturing costs.

Commenters stated that the new regulatory costs, increased energy costs, potential disruptions in the electricity grid and significant job losses caused by the proposed rule will have a negative impact on the metal casting industry in Indiana and nationwide. The commenters remarked that because th e U.S. metal casting companies operate under extremely tight profit margins, the proposed rule and the associated increased cost could be devastating for the metal casting industry. The commenters stated that the metal casting industry is a vital part of t he Indiana and U.S. economy, and INCMA is concerned that this proposed rule could cause foundry closures, loss of high

- wage manufacturing jobs, and loss of business to global competition. The commenters remarked that a strong state and U.S. metal casting i ndustry is critical for national security given its role in the production of military vehicles and aircraft, weapons systems, ordnance, and ship components. Further, the commenters stated that eroding the U.S. metal

c asting industry's global competitive p osition could force off

- shoring of defense casting suppliers, thereby leaving the U.S. potentially vulnerable to producing much needed military equipment in a timely, efficient and cost

- effective manner. In addition, the commenters stated that the metal ca sting industry is a leader in developing energy efficient castings and technologies; for example, metal casters are a critical player in the production of components for many renewable energy products such as wind, solar, nuclear, geothermal, and bio

- and gas

turbine generation. The commenters concluded that the loss of U.S. metal casting capacity from the proposed rule, could damage the domestic capacity to promote such energy efficient technologies.228 Commenters stated that EPA's assumptions on heat rate i mprovement are particularly flawed for plants in merchant markets like Pennsylvania's and Montana's. The commenters remarked that over the past decade or so, PPL Energy Supply has already implemented all realistically achievable efficiency improvements at its coal

- fired power plants in these states. The commenters also noted that PPL Energy Supply's coal fleet in Pennsylvania is substantially more efficient than most others in the industry, and with those investments already made, very little additional imp rovement is available and only at a very high cost

- significantly higher than the $100/MW assumed by EPA. The commenters stated that certainly such investment could not be justified in the current pricing environment in either Pennsylvania or Montana; fur thermore, the owners of existing coal

- fired generation in restructured states would not find any such investment to be economic in light of the agency's assumed forced redispatch of coal plants in favor of more NGCC operation to achieve carbon emission tar gets.

Commenters stated that the resulting expense to electricity rates, will have the effect of increasing poverty, and reducing business efficiency.

Commenters stated that the difficulty in extrapolating based on past and current trends is that
structu ral changes in the natural gas market can make past trends and correlations irrelevant. The commenters stated that forecasters of natural gas prices have not only missed every historic turning point in long term trends, they have acknowledged their inabil ity to predict when future turning points would occur. The commenters stated that using structural models to forecast requires an ability to identify all the exogenous factors that might cause a shift in trends and a basis for forecasting how they will ch ange in the future and that natural gas price forecasters have had little or no success in doing so.

Commenters stated that the impact of higher natural gas pricing goes well beyond the cost of electricity however as many manufacturing industries use gas as a fuel or raw material and recommended that EPA include these secondary cost impacts to manufacturing, as well as the heating cost impact for commercial and residential natural gas users, in the economic impact assessment for the proposed rule. The comm enters stated that between 2002 and 2011, natural gas used for electricity generation was four times as expensive as coal and the U.S. Energy Information Administration (EIA) projects real natural gas prices to increase 31% between 2010 and 2030. The comm enters stated that those states with lower energy cost structures will be most at risk for higher rate increases and most energy intensive manufacturing is also located in states with low energy cost structures. The commenters recommended that EPA allow st ates the flexibility to mitigate the impact on energy intense industries, including flexible incentives for energy efficiency or cost offsets for increased energy prices.

Commenters stated that by simultaneously overestimating the potential benefits of th e proposal and underestimating the costs, EPA claims (in error) that the proposed rule will produce economic benefits. The commenters stated that EPA's reliance on the "social cost of carbon" is wholly inappropriate because that calculation has not been su bject to a rigorous and transparent rulemaking process. The commenters stated that the analysis fails to properly address international benefits and costs. The commenters stated that EPA fails to use full

- economy modeling to evaluate employment impacts. Th e commenters stated that EPA's reliance on co

benefits from simultaneous reductions in pollutants other than GHGs is misplaced and must be revised to reflect the health benefits that would actually be attributable to this proposed rule. (13,229 Please see sec tion 8.7.2, comment 1, for EPA’s response to the comments on the rigor of the SCC; 8.7.2, comment 5 for EPA’s response to comments on the rigor and transparency of the process used to estimate the SCC; and 8.7.2, comment 3 for EPA’s response to comments on the use of global SCC estimates.)
Commenters cited EVA estimates of a $284 billion increase in annual power and gas costs for residential, commercial and industrial customers beginning in 2020 compared to 2012, representing a 60% increase over current cos ts with annual power and gas costs further increasing each year post

- 2020. The commenters cited EVA estimates that annual residential power and gas costs would increase by $102 billion beginning in 2020 compared to 2012 and would continue to escalate in su bsequent years. The commenters cited EVA estimates that average annual household gas and power bills will increase by $680 or 35% from 2012 to 2020 and continue to escalate year

- after

- year as EPA's proposed rule grows more stringent. The commenters cited EVA estimates that annual average home gas heating bills will increase roughly $340 or 50% from 2012 to 2020, annual average electricity bills will increase roughly $340 or 27% from 2012 to 2020, and that cost increases would significantly affect the U.S. industrial sector nationwide, as the total cost for electricity and natural gas would increase 92% from 2012.

Commenters stated that any loss of wholesale revenues through permit imposed operating hour or annual MWh restrictions will result in increased r evenue requirement from ratepayers. The commenters stated that for OMU ratepayers, the loss of capacity revenues associated with ESGS Unit 1 would result in a 5

- 7% rate increase across all rate classes. The commenters stated that considerable heat rate pen alties would be associated with generation levels below design which would increase the number of MWhs that would have to be reduced. The commenters stated that at a minimum, the loss of wholesale revenues associated with the proposed 18% reduction would

r esult in an electric rate increase greater than 12%. The commenters stated that OMU projects residential rates to increase by over 15% (non

- inflation adjusted) between 2015 and 2020 without considering impacts of proposed the Proposed Rule, and that compli ance with GHG legislation could increase the potential rate increase for OMU's customers by an additional 40%. The commenters stated that EPA's cost analysis in the RIA does not address secondary price effects corresponding to the increased costs of goods produced in manufacturing intensive states such as Kentucky. The commenters stated that the Kentucky Energy and Environment Cabinet's modeling projects that a 10% increase in the price of electricity (10% is conservative) would result in a 1.1% reduction i n Kentucky's GDP

- a loss of $2 billion to the state of Kentucky

. Commenters stated that the four Building Blocks EPA has based the rule on suffer from technical and economic problems that will result in this regulation costing far more than EPA projects. The commenters cited NERA projections that electricity prices will experience rate increases from a low of 12% to 17% over the period 2017 through 2031, and natural gas prices will increase from 2% to 29% depending on the scenarios that are executed. The c ommenters cited Energy Ventures Analysis estimates that electricity and natural gas costs for residential, commercial, and industrial customers will increase by 60% by 2020 because of the GHG ESPS, the MATS rule and other EPA regulations aimed at the elect ric power sector. The commenters stated that this will cost $284 billion dollars by 2020, with the total cost increasing with each additional year of implementation and residential energy costs will increase by $680 per year by 2020. The commenters stated that total energy costs for industry will increase by 64%, a $200230 billion increase that will be passed on to their customers or result in factory closures and operations moving overseas

. Commenters stated that they are concerned about the increased electri city costs that a re

- dispatch of the power market could precipitate. The commenters stated that electricity cost increase estimates that range from 7% to 17% and that regional costs can significantly as in the New England area over the past winter, where l ack of transport coupled with regionally higher demand and little supply caused spot market pricing fifteen times over normal regional pricing and twenty times over pricing nationally. The commenters stated that local road blocks to innovation such as thos e raised against coastal wind farms clearly demonstrate that switching to alternate energy sources will not be easily or quickly implemented. The commenters stated that as a manufacturer in a global marketplace, competitive pressures are high and increasin g production costs in one region of the world can shift production to other regions with lower costs, which will not decrease global carbon emissions.

Commenters stated that Ohio electricity prices that were 9% below the national 2013 average, but many Oh io families are struggling with high energy prices. The commenters stated that 53% of low to middle income households spend an average of 20% of their after

- tax income on energy and increased energy prices will further strain these families

. The commenters stated that projected rate increases will have a devastating impact on manufacturing in Ohio and that EPA has drastically underestimated these prices as reputable sources have reported increases as high as 39%.

Commenters stated that the significant swit ch of generating capacity from coal to natural gas driven by this rule coupled with the accelerating manufacturing use of natural gas and the expected future significant export of natural gas for geopolitical considerations has the potential to fundamental ly alter the natural gas supply supply/demand equation, increase natural gas pricing volatility, and impair the US manufacturing renaissance from its full potential as a job

creating engine of economic growth. The commenters stated that these pressures in the US would have a significant detrimental affect not only on the broad US manufacturing base but specifically on the production of secondary (recycled) aluminum given the role natural gas as a key input into the secondary aluminum recycling process.

Com menters stated that given the physical requirements of the metalcasting process (i.e., energy needed to reach temperatures sufficient to melt metals) and the potential threats to global competitiveness, EPA should, as part of this rulemaking, recognize met alcasting as an energy

intensive, trade

- exposed industry and give special consideration to such industries in the requirements for developing state

- specific plans to reduce statewide carbon dioxide emissions as part of this rule. Commenters explained that any carbon dioxide emissions standards for an
energy

- intensive, trade

- exposed industry, if necessary, should be developed specifically for that industry while considering its unique characteristics and potential impacts to global competitiveness.

Response 3 : Commenters stated that the EPA failed to use economy

- wide modeling to look at the impacts of changes in energy prices on the rest of the economy. Commenters mentioned231 particular sectors and regions where the impact might be expected to be greater. Agriculture and manufacturing were frequently cited as bein g particularly dependent on energy prices. Problems for goods exported from this country if energy prices are higher were cited. Increased export of coal was mentioned as a likely result. Energy intensive goods competing in a global market were cited as fa cing problems. Water treatment plants were given as an example of energy intensive products and services delivered by governmental entities that may have to charge more.

The EPA provided a qualitative discussion of secondary market impacts for the proposal and final RIAs, see Chapter 5. Commenters focused on the implications of increases in energy prices. In the final RIA, we present the price changes for natural gas, coal, and electricity. There
are p rojected energy price decreases as well as increases across these energy categories . These projected energy price changes will differ by region a nd market. Commenters focused on the possible impact of energy price increases while ignoring the possible impact of energy price decreases.

To support the Transpor t Rule proposed in the summer of 2010, among other rulemakings, the EPA used the Economic Model for Policy Analysis (EMPAX) to estimate the effect of impacts projected by the Integrated Planning Model (IPM) on markets outside the electricity sector. EMPAX is a dynamic computable general equilibrium (CGE) model that forecasts a new equilibrium for the entire economy after a policy intervention. While the external Council on Clean Air Compliance Analysis (Council) peer review of this study stated that inclusi on of benefits in an economy

- wide model, specifically adapted for use in that study, “represent[ed] a significant step forward in benefit

- cost analysis,” EPA recognizes that serious technical challenges remain when attempting to evaluate the benefits and c osts of potential regulatory actions using economy

- wide models. Consistent with the Council’s advice regarding the importance of including benefit

- side effects demonstrated by the 1990 to 2020 Clean Air Act study, and the lack of available multi

- year air quality projections needed to include these benefit

side effects, EPA has not conducted CGE modeling for this final rule.

However, the EPA recognizes that serious technical challenges remain when attempting to evaluate the impacts of potential regulatory actions using economy

- wide models. The EPA has therefore established a Science Advisory Board (SAB) panel on economy

- wide modeling to consider the technical merits and challenges of using this analytical tool to evaluate costs, benefits, and economic impac ts in regulatory development. The EPA will use the recommendations and advice of this panel as an input into its process for improving benefit

- cost and economic impact analyses that are used to inform decision

- making at the agency. The panel will also be a sked to identify potential paths forward for improvements that could address the challenges posed when economy

- wide models are used to evaluate the effects of regulations.

The advice from the SAB panel formed specifically to address the subject of econo my

- wide modeling will not be available in time for this promulgation. Given the ongoing SAB panel on
economy

- wide modeling, the uncertain nature of the ultimate energy price impacts due to the compliance flexibility for states, and the ongoing challenges o f accurately representing costs, energy efficiency savings

, and economic benefits in economy

- wide modeling, the RIA for the CPP proceeds by presenting the energy impacts associated with the illustrative scenarios analyzed in the RIA (presented in Chapter 3 ), and then presents a qualitative discussion of the232 factors that will, in part, determine the timing and magnitude of effects in other markets (Chapter 5).

Comment 4: The impact of changes in energy markets resulting from the Clean Power Plan will impac t US international trade.

C ommenters stated that the proposed regulations are likely to increase worldwide greenhouse gas emissions by decreasing the international competitiveness of U.S. businesses due to increased energy costs and moving businesses to a reas with less efficient and more carbon intensive energy supplies. The commenters further stated that under this proposal the total cost of the products produced in the U.S. will need to increase, eroding our international competitiveness and resulting in the loss of U.S. Manufacturing jobs, despite businesses investing in cost effective energy savings activities for decades.

Commenters discussed impacts to American refineries, manufacturing, other businesses and hardworking American consumers such as le ss affordable and less reliable energy, loss of jobs, and elimination of fuel diversity. The commenters stated that the proposed EPA rule ignores the successful example of our free market and guarantees adverse consequences for nearly every consumer and bu siness in the U.S. The commenters further stated that the proposed rule threatens our industry's international competitiveness due to higher energy costs.

Commenters stated that additional closures would drive up electricity rates across the country, reduc e the competitiveness of U.S. manufacturers on the international stage, and cause enormous damage to the economies of countless coal communities. The commenters stated that such closures would undermine the reliability of the grid, reduce fuel diversity, a nd damage U.S. energy security. The commenters stated that the proposal arbitrarily fails to consider these important issues.

Commenters stated that Indiana is particularly vulnerable to the economic impacts of the GHG ESPS. The commenters stated that NER A estimates that Indiana's electricity rates will be 12% more costly each year compared to EPA's projections. The commenters stated that with cost increases like those driven by the GHG ESPS, Indiana will lose manufacturing and agriculture jobs to overseas competitors and the overall Indiana economy will endure great hardship.

Commenters opined that the Administration's actions have already begun affecting Alabamians, and just recently Alabama Power cited federal regulations as the impetus behind its decis ion to alter operations at seven operating units located within three power plants across the state. The commenters stated that as part of these transitions, two coal

- fired units at the Green County Electric Generating Plant will be converted to gas

- powere d units, reducing electric generating capacity by a third and eliminating sixty jobs located in the heart of the Black Belt. The commenters stated further that these job losses have serious consequences in a region which has faced declining populations, hi gh unemployment rates, as well as a host of infrastructure challenges. The commenters stated concern that the EPA's proposal, if finalized, would impose enormous costs and burdens on Alabama workers and their families, and would hinder our global economic competitiveness. The commenters also stated that the impact will be felt the deepest in233 states

- like ours

- where fossil fuels provide a significant share of our electricity generation. The commenters also opines that the Administration's claims that energy c osts will not be impacted by this proposal ring hollow, and that simple economics suggest that the EPA's plan will undoubtedly increase electricity prices, which will hinder

- not help

- economic growth. The commenters stated that Alabama has historically seen lower than average energy costs, in part because our state has been blessed with an abundance of natural resources that can be harnessed to power our homes and businesses and to make life better for our citizens.

Commenters stated that manufacturers oper ate in a highly competitive global market and cannot automatically pass on higher raw material and energy costs to consumers and still remain competitive. The commenters stated that in addition to the compliance costs utilities will pass on, the proposal w ould further increase energy costs. The commenters cited an analysis that projected annual costs of $73 billion under a likely scenario and projected total costs of the proposal to be $366 billion to $479 billion over a 15

- year period. The commenters state d that this analysis projected that nationwide, the proposal would cause a 12 to 17 percent average increase in electricity prices, excluding natural gas infrastructure and electrical transmission facilities. The commenters stated that increased use of nat ural gas by the power sector to comply with GHG emission standards will put upward pressure on natural gas costs. The commenters stated that increased costs and continued uncertainty around the treatment of biogenic emissions will adversely affect U.S. man ufacturers of paper and benefits they provide for their communities.

Commenters stated that EPA's analysis of the employment impacts of the Proposed Rule was arbitrary and capricious because EPA only evaluated employment impacts in a few select industries

. The commenters stated that EPA's partial economy model failed to address impacts in the communities that support coal

- fired electricity generation and on consumers of electricity. The commenters stated that a whole economy model must include employment across a wide range of sectors, sufficient detail at the regional level to identify changes in the regional distribution of output and employment, international trade flows to evaluate how regulations will affect tradable sectors and dynamic analyses to ex amine adjustments in labor and capital markets in response to regulations over time.

Commenters stated that EPA's assessment of labor impacts ignores the largest labor impacts, which are the indirect jobs impacted as a result of higher energy costs. The commenters stated that higher natural gas prices and electric rates will result in the economic dislocation of some industries, particularly those industries that are energy intensive, as they are unable to fully pass thru the higher cost of electricity and natural gas to their consumers and customers. The commenters stated that EPA must con sider these indirect job impacts in the RIA.

Commenters stated that manufacturers rely on secure and affordable energy to compete in a tough global economy, and that manufacturers' recent gains are largely due to the abundance of affordable energy we now enjoy. The commenters stated that manufacturers across CSX's 23

- state network, have invested more than $14 billion in rail

- served facilities, creating more than 14,000 jobs over the last five years. The commenters stated that in 2013, $3 billion in custom er investments generated more than 1,600 new job opportunities. The commenters stated that economic productivity and environmental progress could be undermined by the Proposed Rule and EPA's failure to analyze foreseeable economic impacts.234 Commenters stat ed that the CPP will drive manufacturing and jobs out of state and overseas. The commenters stated that the proposed rule will impose costs on U.S. businesses in numerous ways without meaningfully reducing global GHG emissions.

Commenters stated that Chin a is investing heavily in advanced coal technologies, and failure to keep up would put America at a competitive disadvantage. The commenters stated that carbon capture and sequestration (CCS) can protect coal jobs in West Virginia and create a whole new

o pportunity for American job growth, developing and perfecting CCS technology to meet global demand.

Commenters stated that NERA did not separately represent the gas

- intensive components of the manufacturing sector, but grouped gas

- intensive manufacturing with a much larger subset of manufacturing. The commenters stated that this grouping produced a weighted average representation that muted the impact of sectors highly sensitive to changes in gas prices. The commenters stated that the result from NERA's ov erestimations was that LNG would be exported only under extreme scenarios of supply and/or demand shocks, and that this finding is contrary to market signals. The commenters stated that the unintended consequences of high LNG export scenarios are lower eco nomic benefits of GDP, employment, and trade balance, and that if left unmonitored, high LNG exports could prevail at the cost of the broader economy.

Commenters stated that if electricity and natural gas costs rise because of a state's implementation pla n, industrial GHG leakage will shift GHG emissions to either other states or to a foreign country. The commenters stated that a cost safety valve would allow states the flexibility to complete a cost impact analysis on an annual basis and determine what re visions are necessary to limit cost increases to less than 2 percent in future years.

Commenters stated that forest products facilities are energy

- intensive and operate in a highly competitive global market, face fierce international competition, and cann ot automatically pass on higher raw material and energy costs to consumers and still remain competitive. The commenters stated that increased costs will adversely affect U.S. forestry products' global competitiveness, and the jobs and other economic and so cial benefits they provide for their communities. The commenters stated that European nations and others fully recognize bioenergy as carbon neutral in their GHG reduction schemes, highlighting the adverse competitiveness impacts of the uncertainty around biogenic emissions.

Commenters stated that reducing coal utilization at existing power plants will likely result in more volatile and expensive electricity prices, but that EPA does not show that these regulations will significantly reduce global greenhou se gas emissions. The commenters stated that the EPA's proposal would likely make these foreign power producers more attractive to some industries, encouraging greater utilization of unregulated coal power plants abroad. The commenters stated that 60,104 m egawatts of electricity from 381 coal units in 36 states are scheduled for retirement.

Response 4 : Commenters stated that higher energy prices would decrease the international competitiveness of U.S. businesses. Manufacturing, agriculture, and forestry p roducts were cited as sectors that would face a disadvantage due to higher energy costs.235 The EPA did not quantitatively project the impact of the emission guidelines on international trade. The commenters focused on energy cost increases and did not menti on potential advantages in global competitiveness when energy costs decrease. Without quantitative trade estimates, it is difficult to say much about international competitiveness. The competitive position of some industries will suffer

, while others will be enhanced. See chapter 5 of the RIA for a discussion of potential secondary market impacts.

Comment 5 : Jobs will be lost (or gained) as a result of the Clean Power Plan.

5.a. Commenters state that the Clean Power Plan will result in loss of jobs rela ted to coal

Commenters suggested that EPA now claims economic growth does not require commensurate electric energy growth despite economic principles and the EPA regulatory impact analysis observations that growth and the availability of electric power in this country has closely paralleled the growth in our economy for decades. The commenters stated that states such as Missouri that still build cars, process or produce aluminum, process meat and lumber, or have other energy intensive industries will be imp acted by changes in the electric energy base load. Commenters questioned how a reduction in coal could result in a job growth of 28,000 jobs in the fuel extraction sector in 2020, as estimated by EPA. The commenters suggested that "when the health and welf are of people are adversely affected by the actions of man, some positive action is sometimes justified when very limited negative economic activity might occur". However, the commenters stated that the rule will result in severe economic hardships the
pro posed rule will result in job losses in coal mining states based upon unproven theories of climate change and should therefore not be accepted.

Commenters opposed the Clean Power Plan as proposed because it will lead to the closure of 41 to 49 gigawatts of coal fired generated capacity by 2020, resulting in the loss of 52,000 permanent direct jobs in the utility, rail, and coal mining sectors and an additional 100,000 direct jobs. Commenters further stated that EPA's number must be viewed with suspicion bec ause EPA claimed the MATS rule would close only 4.7 gigawatts of coal generation, but experts have now confirmed that 56 gigawatts of coal generation will be lost by 2016. Taken together, the commenters stated that the MATS and the Clean Air Plan will clos e approximately 40 percent of today's coal fleet and result in a loss of over 400,000 American jobs at a time when the nation continues to recover from the worst recession since the Great Depression.

Commenters stated that with 63,896 employees, the combin ed employment impacts of the coal industry, associated transportation and power generation industries account for 11.3 percent of employment by private industry in West Virginia. The commenters stated that at $6 billion, the combined direct impacts amount to nearly 9 percent of GSP and including the multiplier effect of spending by these industries and households employed by the industry, the impact amounts to $8.8 billion or 12.7 percent of GSP. The commenters stated that taxes paid by the coal industry

ar e estimated at $638 million in 2012, including property taxes, severance taxes, workers' compensation, net income, and personal income taxes paid by industry employees and others

.236 Commenters cited research at the University of Nebraska

- Lincoln that coal as a generating resource for electricity, combined with its transportation, primarily by rail, generates about $4.9 billion in output, including $1.4 billion in labor income, and more than 22,800 jobs for the state.

Commenters discussed the potential for jo b losses as a result of the rule. Commenters stated that EPA failed to meaningfully consider employment impacts of Clean Air Act regulations by not using whole economy modeling that would have captured a much more accurate picture of the likely job losses from this proposal. The commenters further stated that EPA failed to undertake an employment analysis under Section 321A of the Clean Air Act, which requires the continuous review of potential job losses and shifts in employment due to the implementation o f the act. Commenters stated that the onslaught of overregulation and lack of certainty in the coal industry has contributed to the loss of 7,000 coal jobs since President Obama took office as opposed to the increase in 3,500 coal jobs that occurred in the previous administration according to EIA and Kentucky Energy and Environment Cabinet. Commenters stated that the proposed rule will lead to the closure of coal

- burning power plants and the loss of more than 52,000 jobs in the coal, utility and railroad in dustries by 2020, and an additional 65,000 job losses by 2030. Commenters further stated that the proposed rule will lead to direct and indirect employment losses of over 208,000 jobs by 2030. Commenters urged the EPA to withdraw its proposal for new emis sions regulations on the basis of the direct job losses in the coal industry, the indirect economic impacts to communities as a result of coal industry overregulation, and the lack of overall environmental benefit. The commenters cited EPA's emission reduc tions assessments and stated that the proposal will result in a meaningless 1 percent reduction in atmospheric CO2 concentrations, an insignificant reduction in global average temperature of 0.016 degrees Fahrenheit. The commenters noted that a study will be conducted by DMME and CCER (no abbreviation definition provided) to report on the effect of increased energy prices on lower income populations and the negative economic impacts to coal country, including job loss, in order to show how damaging these ne w regulations are to the economy. Commenters also stated that all of the public forums have been far from coal country, making it prohibitive for those affected to speak to their plight.

Commenters stated that the proposed rule threatens its viability. T he commenters stated that EPA's Regulatory Impact Analysis indicates that the rule would cause Appalachian coal production for electric generation to decline from 140 million tons in the 2020 base case to 87

- 91 million tons, versus 246 million tons of coal in 2009. The commenters stated that decreased coal production will result in significant job dislocations, income losses, and diminished tax bases. The commenters stated that each coal job has a 5 to 1 multiplier effect on the mine services, consumable su pplies, and the local communities where the mines and mine employees spend the revenues and household income generated from coal sales. The commenters stated that the proposed re

- dispatching of coal generation to natural gas combined

- cycle units, unrealist ic energy efficiency goals, and new renewable energy targets would create a cycle of increasing coal fired power plant and mine closures, direct and indirect job losses, and higher electricity prices adversely impacting manufacturing and other key job

- inte nsive sectors.

Commenters stated that EPA may have underestimated closure of coal

- fired EGUs and resulting employment loss and cited underestimates associated with the MATS rule. The commenters stated that, taken together, MATS and the Clean Power Plan w ill close approximately 40 percent of today's coal fleet and result in the loss of approximately 400,000 American jobs.237 Commenters stated that EPA notes the average delivered coal price is expected to decrease 16 to 17% in 2020 and 18% in 2030, and coal p roduction is predicted to decline by 25 to 27% in 2020 and 30 to 32% in 2030. The commenters stated that the goal of this plan is to reduce utilization of coal

- fired EGUs, and this will result in displacement of those in the coal mining industry.

Commente rs stated that the primary concern of the IUOE is that the regulation could cause job loss for its members, eliminating high

- quality, family

- sustaining jobs, which could affect broader swaths of the economy and drag down overall economic performance.

Comm enters estimated that roughly 6% of its members will lose their jobs if the Clean Power Plan is finalized in its current form. The commenters stated that local power plants provide jobs for hundreds, and often times, thousands of workers. The commenters st ated that the CPP will influence the cost of electricity for residents and businesses, impacting regional growth, employment, taxes, and wages. The commenters predicted that more than 500 coal

- fired power plants will be shut down, and 41GW

- 49GW of coal

- bas ed electric generating capacity would be closed by 2020.

Commenters stated that during the period 2001

- 2013, while its energy costs escalated, California lost 650,000 manufacturing jobs

-- approximately one

- third of all California manufacturing jobs. The co mmenters stated that 34 percent of the nation's welfare recipients live in California. The commenters stated that California has shown the disastrous consequences of abandoning coal as an energy source and pushing jobs for the working class out of its bord ers, often to Mexico and other countries. The commenters stated that that Missouri is at the crossroads between the South and Midcontinent Independent System Operator power regions, which are expected to incur "over half the U.S. total costs during the 201 4

- 30 timeframe," and "will shoulder more of the economic consequences of compliance."

Commenters stated that EPA failed to analyze the Proposed Rule's state

- level employment and other economic impacts of [Building Block 1 and] Building Block 2. The commen ters contended that the retirements that Building Block 2 in particular precipitates could have dramatic local economic impacts; for example, if any of our coal

- fired plants were forced to shut down it would mean the loss hundreds of high

- wage jobs in rura l areas where there are few or no alternative employment options, devastating the local economies. Further, the commenters believed that these areas would remain hard hit even if new NGCC facilities were constructed close by as the siting, permitting, fina ncing and construction of NGCCs would take several years and require less than a third of the staff required to operate coal

- fired power plants. Coal mine and craft labor job losses should also be expected. Commenters also stated that despite the extensiv e local economic impacts caused by Building Block 2, EPA's Regulatory Impact Assessment (RIA) only analyzes national employment impacts. The commenters also stated that while the employment impacts from some aspects of the Proposed Rule may be felt across all states (e.g., demand

- side energy efficiency), the employment impact from coal plant retirements assuredly would not. The commenters recommends that to appropriately analyze the Proposed Rule's economic impact, EPA should determine state

- specific employ ment effects.

Commenters stated that EPA impermissibly calculated health benefits due to reductions in criteria pollutant concentrations to below the level of the NAAQS, and dramatically skewed the climate benefits by presenting global benefits rather tha n just U.S. benefits. The commenters238 stated that mining job losses in West Virginia were underestimated because less productive mines would be closed first. The commenters stated that coal

- fired EGU job losses in West Virginia were underestimated.

Commenters stated that EPA appears to have grossly exaggerated the benefits from the proposed rule, particularly because most reductions in carbon dioxide emissions have already occurred since 2005.The commenters stated that EPA should not be claiming bene fits that have already been achieved, but rather should be limited to those benefits that are anticipated from the implementation of the proposed rule. The commenters stated the costs are underestimated because EPA assumes that the utilities can easily switch fuels for existing sources and build new power plants that rely on natural gas and renewable energy. The commenters stated that EPA also minimizes t he cost of the proposed rule because it unrealistically assumes that the price of natural gas will remain at its historically low levels for the next 25 years. The commenters stated that forcing 50 percent of coal

- fired power plants to retire would equate to the loss of approximately 500,000 jobs nationwide, and that the number of new "green" jobs will not offset the anticipated job losses.

Commenters stated that the RIA overstates benefits and underestimates costs, by double counting benefits of energy ef ficiency and inappropriate netting of market

- driven and state program

driven efficiency, not counting integration costs of intermittent renewable technology, overestimating emission reductions associated with renewable technology and practical conflicts wi th grid operation, not including reliability impacts, and not counting net employment impacts. The commenters stated that the RIA includes gross employment effects of energy efficiency and renewable energy programs, not net estimates accounting for jobs lo st due to higher energy prices. The commenters stated that overall, U.S. carbon intensity has declined over the last decade and half (or longer), largely as a result of autonomous changes in fuel sources and that such improvements are likely to continue, y et the CPP claims credit for future reductions that would occur in the absence of the CPP. The commenters stated that each state has a unique economic structure, with various productive activities contributing to each one's economy. The commenters stated t hat energy policy and regulation should not dictate "acceptable" industrial sector makeup, through regulatory actions that artificially inflate energy costs. The commenters stated that such regulation interferes with the natural, market

- driven changes in s tate economies. The commenters stated that this is an area where the CPP underestimates costs of the impacts imposed on other industries that are not the direct target of the proposed regulation.

Commenters stated that it reviewed data from 93 plants in 3 1 states, with an average CO2/MWh rate of 2,626, or roughly 20 percent less efficient than the average coal plant. The commenters stated that these 93 plants employ at least 8,000 employees and have a nameplate capacity of approximately 50 GW.The commenter s stated that Pennsylvania is the most affected state, with 13 plants in danger of retirement, followed by Michigan, with seven possible retirements, and Illinois with six. The commenters stated that there are 14 states that could force at least three plan ts into early retirement. The commenters stated that Jonathan Masur and Eric Posner examined several past RIAs from EPA and found that had the analyses monetized the job losses, the costs of the regulations would have exceeded the benefits. The commenters stated that using a central estimate of $100,000 per displaced worker, the monetized costs for this rulemaking would total $4.2 billion, and that this would bring topline compliance cost to $13 billion.239 Commenters stated that in addition to increased cost s of the proposed rule, significant job losses are expected from the proposed rule, and electric utilities and the electric workers union have estimated that the closure of coal

- fired power plants will result in significant job losses; for example, forcing 50 percent of coal

- fired power plants to retire would equate to the loss of approximately 500,000 jobs nationwide. The commenters stated that additional closures of coal

fired plants will result in even higher job losses and Indiana would be disproportion ately impacted given the states historical reliance on this natural resource. Furthermore, the commenters stated that the increased energy costs and decreased reliability of electricity capacity and delivery will likely have a ripple effect and lead to fur ther job losses from energy consumers and operators of coal

- fired combustion units such as the metal casting industry. The commenters stated that while it is true that some new "green jobs" will be created with natural gas and renewable energy power plants , the number of new jobs will not even come close to offsetting the anticipated job losses, and this assertion is consistent with recent experience with the creation of new "green jobs" resulting from new regulatory requirements. The commenters stated that typically, the creation of new "green jobs" has significantly lagged behind the expectations and predictions in EPA's regulatory impact analysis, and to assess the potential costs of the proposed rule fairly, EPA must consider the increased energy costs, the disruption in electricity capacity and delivery, and the significant number of job losses anticipated.

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvania, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the total national electric generation as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the sta te had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stated that West Virginia's economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to surround ing states. The commenters stated that the wholesale reduction of the coal market, along with the costs associated with implementing the Plan, will result in wide

- ranging harm to state and local economies, triggering job loss, shrinking tax bases, a declin e in manufacturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwest Independent System Operator, a regional power grid operator, estimated that its 20

- year discounted compliance cost of the ru le will be $55

- $83 billion. The commenters stated that some national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate increases in 43 states, with 14 states facing peak year electricity price in creases that could exceed 20%. The commenters cited other estimates that wholesale electricity costs will increase by $274 billion; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion

. Commenters stated that affordable and reliable electric power is essential to the continued recovery of Indiana's manufacturing economy, which accounts for about 500,000 high

- paying jobs in the State, in addition to 28,000 in the coal industry. The comm enters stated that Indiana will experience a disproportionate share of rate hikes, not just because the state is so reliant on coal for its electricity, but also because Indiana has average retail electricity prices below the national average. The commente rs cited NERA estimates that the actual increase in rates for Indiana could be close to 12 percent. The commenters stated that with 1.3 million lower

- and middle

- income households in Indiana, spending an average of 19 percent of their after

- tax income on energy, it State is vulnerable to rate hikes.240 Commenters stated that over

- reliance on any one fuel source creates extraordinary volatility and risks for consumers and the economy. The commenters stated that when 8,358 MW of coal generation are forced to retire (as per EPA's estimates for 2020) as a result of Block 2, numerous Texas jobs will be lost and the resulting increase in natural gas price will create more volatility and significantly higher retail prices for Texas electric consumers.

Response 5.a

. : The EPA recognizes that as older fossil

- fuel fired power plants

– chiefly coal

fired power plants

– retire, demand for coal will decrease, along with the jobs operating the closed plants and extracting coal. The EPA also recognizes that coal miners and coal plant operators have been facing ongoing job losses because of shifts in the market from coal to natural gas, and that there is likely to be additional job loss in sectors related to coal attributable to implementation of the CPP. Impacts on employmen t are estimated in the RIA for the CPP, see Chapter 6. However the EPA encourages states to work with affected communities to tailor their compliance programs with local jobs concerns in mind. The CPP offers flexibilities that guarantee a continued relianc e on a diverse energy mix, and also allows for a long implementation period in order to ease the transition to a lower carbon energy mix.

On the other hand, the EPA expects that there will be new jobs in the power sector associated with both improving the efficiency of fossil

- fuel fired power plants and construction of new natural gas

- fired plants and renewable power production. In addition, the EPA expects that there will be new jobs in renewable energy and in the demand

- side energy efficiency sector. Th ese are jobs helping users of electricity

- our homes, businesses, public buildings, and industrial facilities

– to use less energy overall. This includes, for example, the machinists that manufacture energy efficient appliances and equipment, construction workers who build efficient homes and buildings or weatherize existing ones, service providers who conduct energy audits and install new efficient technologies, and engineers and programmers who design and improve building energy management systems.

With regard to the comment mentioning section 321(a), EPA disagrees with this comment. Section 321(a) does not require EPA to conduct employment evaluations as part of the rulemaking process or as a prerequisite to the issuance of a rule. The broad language of Section 321(a) does not address the scope, frequency, or timing of employment evaluations, leaving these matters to the discretion of EPA. In the exercise of its discretion, however, EPA does routinely evaluate employment impacts when it conducts new rulem aking. Indeed, EPA conducted a robust employment analysis for this action, including a discussion of economic theory and employment, recent employment trends, and projected sectoral employment changes due to the Guidelines. See Chapter 6 of the RIA for the proposed rule and Chapter 6 of the RIA accompanying this final rule. EPA has conducted similar assessments for other rulemakings and continues to evaluate employment impacts generally and to refine its employment

- analysis methods. Together, these efforts constitute “continuing evaluations of potential loss or shifts in employment” for the purposes of Section 321(a).

To the extent that the commenters is suggesting that Section 321(a) requires EPA to evaluate the cumulative employment impacts of all its rul es, Section 321(a) contains no such requirement. Nevertheless, in EPA’s continuing effort to advance the evaluation of costs, benefits, and economic impacts associated with environmental regulation, EPA has formed a panel of experts as part of its Science Advisory Board SAB to advise the Agency on the technical merits and241 challenges of using economy

- wide economic models to evaluate the impacts of regulations. The panel of experts will consider a variety of issues related to the use of economy

- wide modeling, including their technical appropriateness for assessing employment impacts. Answers from the panel of experts will help EPA assess whether economy

- wide models can be used to evaluate employment and other economic impacts in the future.

5.b. Commenters sta te that the Clean Power Plan will cause job loss in specific locations.

Commenters cited EPA's projections that five of the seven coal units in Arkansas and all of the coal units in Arizona would shut down as a result of the proposed rule. As such, the com menters stated that these high wage job losses would devastate local economies, even in areas where new NGCCs are constructed because NGCCs require less than one

- third of the staff required to operate a coal fired plant.

Commenters urged EPA to consider th e economic, social and reliability impact that would result from three local generating plants shutting their doors including the loss of 330 jobs and over $20 million in wages before benefits, the loss of tax revenue, sales tax and the need for increased government assistance to feed families. In addition, the commenters stated that the job skills of the workers cannot be easily transferred to other occupations, and other employees in management, contracting, supplying, railroad, mining, electrical and ser vice will also lose their jobs.

Commenters stated that, in addition to the impact on electric rates, these retirements will cause jobs to be lost and will have adverse impacts on local economies and local government tax revenues. The commenters stated that these impacts have already been seen in the local economies of the areas where plants have already been shut down. Commenters stated that closing this much generation in such a short timeframe also raises serious concerns about the ability to maintain rel iability and meet peak demand, especially during extreme weather. The
commenters assumed there are still federal requirements that a utility maintain an adequate generation reserve, so reliability is attained.

Commenters stated that as plants close or sca le back operations, the loss of jobs and tax income in communities across the region will be a significant blow to the economy at the local level

- impacting families, businesses, schools, roads and essential services.

The commenters stated that many fami lies could lose permanent, high paying, high quality jobs in the rural communities where EPA has identified potential power plant retirements and that families in coal mining communities will experience the same devastating loss of income.

Commenters stat ed that the effect of Block 2 would force many of Texas' lignite power plants to close, directly harming the employees and communities of the co

- located lignite mines. The commenters stated that since these power plants are mine

- mouth plants, there is litt le if any potential to seek other uses for this lignite, requiring the shutdown of the mine. The commenters stated that this would lead to significant job losses, stranded resources at these power plants and serious reliability risks across the entire stat e.

Commenters stated that based on Arizona

- specific modeling, the State of Arizona and Apache County in particular, will be severely impacted if two coal fired power plants cease operation.242 The commenters stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in annual gross state product and $170 million real disposable personal income. The commenters cited estimates that 56% of Apache County's property tax value could be eliminated, including two

- thirds to three

- quar ters of the property value that supports the local school districts. The commenters stated that with limited alternative employment opportunities, the associated exodus of plant employees from the region could potentially result in a drop in housing values , shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library districts, fire districts, etc., currently born by the utilities and their employees.

Commente rs stated that two power plants employ 218 and 332 full

- time equivalent (FTE) staff, and contribute to approximately 4,000 jobs per year in the state of Arizona, nearly 70% of which are located in Apache County. The commenters stated that if these plants a re closed Apache County could lose 2,700 FTE jobs, $600 million in annual gross state product, half of its property tax value to be eliminated and two thirds to three quarters of the property tax value that supports the local school districts. The commente rs stated that when Building Block 2 is applied in the state, Arizona has no ability to retain newer or upgraded EGUs that have significant remaining asset value. The commenters urged EPA to provide Arizona with the same level of flexibility to achieve sta te goals that is afforded to the rest of the nation.

Commenters stated that EPA's cost effectiveness evaluation did not take into account the financial impacts to communities that depend on the direct and indirect economic contribution from nearby coal

- fi red power plants. The commenters stated that Apache County Arizona could lose 2,700 jobs and $600 million in annual gross state product, over half of Apache County's property tax value could be eliminated, including two thirds to three quarters of the prop erty tax value that supports the local school districts, and the associated exodus of plant employees from the region could potentially result in a drop in housing values, shuttering of local businesses, and closing of schools.

Commenters stated that if G ibbons Creek were to close down in anticipation of the proposed Greenhouse Gas Rule coming on top of the other environmental regulations affecting coal

- fired power plants there would be direct impacts to TMPA's Member Cities, to their ratepayers, to the

em ployees of TMPA, and to the communities surrounding the Gibbons Creek power plant. The commenters stated that the impacts to the Member Cities and their ratepayers are associated with stranded costs of investment in the plant and its facilities and the cos ts of replacing the lost power. The commenters stated that the loss of employment of the approximately 100 TMPA employees would affect the employees and their dependents. The commenters stated that the loss to the local communities would be significant as TMPA is a major contributor to the county and three school districts through payments in lieu of taxes (PILOT) totaling approximately $1 million per year.

Commenters stated that EPA has not thoroughly analyzed anticipated cost impacts on a case

- by

case ba sis, and that the expected benefits to Mississippi of the proposed rule are justified by the magnitude of the expected costs that Mississippi ratepayers will bear under the Clean Power Plan. The commenters stated that the proposed rule would impose a dispr oportionate burden on Mississippi by effectively mandating elimination of low

- cost coal generation, and the impacts will also have a magnified effect on the state GDP. The commenters stated that the Clean Power243 Plan would effectively require elimination of coal generation in Mississippi, causing a radical shift in resource mix and reliance on NGCC units to provide baseload service. The commenters stated that EPA has neither evaluated the impacts of such a significant shift in resource roles, nor whether the resulting mix of baseload, intermediate, and peaking resources is feasible.The commenters stated that the proposed rule is estimated to cost Mississippi ratepayers $14 billion by 2030, not including fuel costs. The commenters also cited impacts on industr y and job creation. The commenters estimated that using all four building blocks, Mississippi retail ratepayers will experience an 11 percent increase in average delivered electricity prices over the 2017

- 2031 time period, using only Building Blocks 1 and 2, this figure is 14 percent, and that wholesale rates could increase 20

- 25 percent. The commenters projected an increase in electricity production cost of 177 percent increase from 2012 to 2020, measured in real 2012 dollars. The commenters predicted tota l electricity cost is would increase 57 percent from 2012 to 2020 (measured in real 2012 dollars), residential electricity bills were estimated to increase 35 percent, and industrial electricity rates were expected to increase 69 percent (measured in real 2012 dollars). The commenters predicted an increase in natural gas demand by 2020 and an increase in the price of natural gas of 114 percent from 2012 to 2020 (measured in real 2012 dollars).

Commenters stated that the GHG ESPS will reduce demand for Indi ana coal and result in losses of good paying jobs in rural communities. The commenters stated that manufacturing and agriculture are significant users of electricity in Indiana and will suffer significant losses if the proposed GHG ESPS is promulgated. Th e commenters stated that manufacturing and agriculture in Indiana are dependent on the low cost of electricity. The commenters stated that state's utility rate forecasting experts have predicted electrical rates in Indiana will rise by more than 30% over
t he next decade

- prior to considering the impacts of the GHG ESPS. The commenters cited NERA projections that rates will be 12% more costly each year compared to EPA's projections. The commenters cited an Energy Ventures Analysis prediction that electric ra tes for industrial customers will increase by 50% by 2020, and natural gas costs in Indiana will increase by 108%.

Commenters stated that the proposed interim goal for Arizona would require Arizona to achieve greater emission reductions by 2020 than any o ther state affected by the Proposed Rule, and that meeting this interim goal would require a dramatic and abrupt shift in generation from coal

- fired plants to natural gas combined cycle ("NGCC") facilities. The commenters stated that EPA's Integrated Plann ing Model assumes that all of Arizona's coal

- fired power plants would cease operating by 2020. The commenters stated that these plants are important sources of high

- wage employment, and most are located in rural areas where there are few or no alternative employment options. The commenters stated that this raised questions about EPA's authority to dictate to the Arizona Corporation Commission the non

- economic dispatch of generation and the effect of such requirements on rates and reliability.

Commenters st ated that union laborers are participating in the conversions of coal plants to natural gas, they are building the pipeline infrastructure to meet the needs of the growing natural gas demand, they are building three of the five nuclear reactor units under construction, and they are building wind farms and solar fields at unprecedented scale. The commenters stated that the loss of outage work in coal

- intensive areas creates a disproportionate burden on the working families of these communities. The commenter s stated that the City of Miamisburg stands to lose 7.4% of its property tax base with the closing of the O.H. Hutchings Power Station and the244 closing of AEP's Muskingum River Power Plant will cost each of the Frye and Wolf Creek School Districts 10% of th eir operation funds. The commenters stated that the proposed rule would place an additional 1,675 operations workers (150

- 200 FTE Laborers alone) and hundreds more Laborer outage workers at risk at the nine remaining Ohio coal plants subject to regulation. The commenters stated that EPA in their guidance to states should recognize the need to require provisions for displaced workers, that these policies are designed to maximize construction job creation (preferably in the energy sector) and assist workers i n transitioning to them, and that all new programs created in pursuit of demand side or energy efficiency construction require responsible standards to guarantee that as new sectors emerge they provide family

- sustaining jobs. The commenters stated that one avenue for providing policy solutions for displaced workers would be for EPA to require components in the state planning process such as an economic impact report relevant to the power sector.

Commenters stated that foreign direct investment (FDI) has al so led to the creation of 2,118 new direct jobs in 2014, or 45 percent of new announced jobs. The commenters stated that this investment will be jeopardized by rising energy costs due to the proposed rule. The commenters stated that they were concerned bot h about their ability to attract new businesses, as well as about the ability of current businesses to continue to operate.

Commenters stated that coal

- fired power plants are an important source of high wage employment and most are located in rural areas that have few or no alternative employment options. The commenters stated that the abrupt closure of existing coal

- fired powe r plants would devastate these communities; even areas that might receive some re

- employment benefit from the construction of new NGCCs would face economic hardship, because NGCCs require less than a third of the staff required to operate comparable coal

- f ired power plants. The commenters stated that EPA's RIA fails to adequately consider the costs of compliance for state and local economies and, instead, inappropriately focuses on national level impact; this analysis is inapposite to the proposed rule, whi ch proposes emission rate goals on a state

- by

- state basis.

Commenters opined that the Administration's actions have already begun affecting Alabamians, and just recently Alabama Power cited federal regulations as the impetus behind its decision to alter o perations at seven operating units located within three power plants across the state. The commenters stated that as part of these transitions, two coal

- fired units at the Green County Electric Generating Plant will be converted to gas

- powered units, reduc ing electric generating capacity by a third and eliminating sixty jobs located in the heart of the Black Belt. The commenters stated further that these job losses have serious consequences in a region which has faced declining populations, high unemploymen t rates, as well as a host of infrastructure challenges. The commenters stated concern that the EPA's proposal, if finalized, would impose enormous costs and burdens on Alabama workers and their families, and would hinder our global economic competitivenes s. The commenters also states that the impact will be felt the deepest in
states

- like ours

- where fossil fuels provide a significant share of our electricity generation. The commenters also opines that the Administration's claims that energy costs will not be impacted by this proposal ring hollow, and that simple economics suggest that the EPA's plan will undoubtedly increase electricity prices, which will hinder

- not help

- economic growth. The commenters stated that Alabama has historically seen lower than av erage energy costs, in part because our state has been blessed with an abundance of natural resources that can be harnessed to power our homes and businesses and to make life better for our citizens.245 Commenters stated cost considerations: besides the rate increases already experienced from early adoption actions, the implementation of this initiative will further increase rates. The commenters also stated that it is imperative to consider the significant job losses in New Mexico due to the reduced use of c oal. The commenters noted that this has been detrimental to many, but has had the greatest impact on the Native American population who has historically held the greatest percentage of jobs at both the coal mines and the power plants. The commenters noted that New Mexico continues to rank among the very poorest states in the nation, and the extreme poverty rates make any electric rate increase detrimental to our citizens. The commenters opines that these actions will necessarily increase rates. The commente rs concludes that the state's economy and New Mexico household costs should not be threatened by substantial increases in electric costs and further job losses.

Commenters stated that thousands of Montanans are employed in high

- paying jobs related to
extr action, use, and distribution of coal and these jobs support families as well as communities. The commenters stated that it is critical that any plan be designed to protect and maintain these jobs while meeting the new environmental standards. The commente rs stated that they do not believe that jobs and the environment are automatically contrary to one another and they strongly support having the choice on how to meet the proposed rule. The commenters stated that it is important to find the right combinatio n of "inside

- the

- fence" measures

- like heat

- rate improvement and installing new technologies, like carbon sequestration

- and "outside

- the

- fence"

measures

- like deploying more renewable energy and improving energy grid efficiency. The commenters stated t hat the rule must create more economic opportunity for Montana's working families and ensure that news jobs are jobs of good quality. The commenters stated that this rule could bolster emerging sectors of the economy and re

- establish manufacturing centers in the United States dedicated to supplying the needs of an expanded energy economy. The commenters stated that to maximize the benefit of any net job creation it is essential that these new jobs are good jobs that provide family

- sustaining, prevailing wag es and benefits as well as support Buy American policies.

Commenters stated that new GHG emission requirements will have a large and immediate impact on the job climate across our state, and much of that impact will be felt in my community where a large p ortion of the economic activity relies on coal

- based energy production. The commenters further stated that Indiana County and the neighboring areas are home to a number of affected EGUs (including Conemaugh Generating Station, Keystone Generating Station, Seward Generating Station, and the Homer City Generating Station) and that these power plants serve as lynchpins of the local economy, with extensive direct, indirect, and downstream economic impacts. The commenters referred to the Homer City Generating St ation, which is located in the middle of the district, as an example of how important all of these power plants are to the local economy. The commenters noted that in terms of direct employment, this facility employs more than 250 local men and women, and many of these employees are unionized and receive significant family

- sustaining benefits packages. The commenters stated that the indirect economic activity generated by the Homer City Generating Station supports the companies that provide services and pro ducts for the plant's operations, including coal mines, the coal truck operators, the rail transportation infrastructure that carries coal to the power plant, the scrubber byproduct processing facilities, and a water treatment facility to process the plant 's wastewater. The commenters estimated that the nearby Homer City Coal Cleaning Plant employs 50; the related coal mining operations employ between 350 and 450 individuals; and between 250 and246 350 coal truck drivers deliver coal to the power plant. Howeve r, the commenters stated that it is the downstream impact that best demonstrates the power plant's importance to the community, and the economic ripple effect extends well beyond the hundreds of employees who report to work each day. The commenters estimat ed that the facility is responsible for the purchase of $395 million worth of goods and services every year in the local area, and that figure represents a significant amount of economic activity for any locale, much less in our portion of Western Pennsylv ania. The commenters stated that every dollar spent in the community is recycled many times, supporting everything from direct vendors to the power plants and their suppliers to byproduct processing companies to the local restaurants, and that the taxes ge nerated from this economic activity create tax revenue that is critical to municipal governments and school districts. The commenters noted that the ongoing installation of a scrubber system underscores the importance of the Homer City Generating Station, with a cost of nearly $750 million, and the project demonstrates a long

- term commitment to the environment, the needs of the power grid, and the local community.

Commenters stated that the retirements Building Block 2 precipitates would have dramatic loca l economic impacts. The commenters stated that shutting down the Coronado and Springerville Generating Stations in Apache County, Arizona, would cause over 4,000 individuals to lose their jobs, nearly 70 percent of which are located in Apache County, and cut $600 million in annual gross state product from Apache County. The commenters stated that with limited alternative employment opportunities, the resulting exodus of plant employees would depress County housing values, shutter local businesses, and coun ty services would be curtailed as remaining County residents would be unable to alone shoulder the entire financial burden of supporting communal services, such as schools, medical centers, library districts, and fire districts. The commenters stated that the RIA only analyzes national employment impacts. The commenters stated that the Proposed Rule must give the states greater discretion in determining the appropriate performance standards for affected units.

Commenters stated that the proposal would have tremendous impacts on the communities where Tri

- State owns and operates coal

- fired EGUs if those EGUs are forced to shut down or to curtail their operations severely. The commenters stated that when indirect impacts of Craig Station are taken into account , the plant is responsible for $489.6 million in regional total output. The commenters stated that Craig Station is responsible for providing three of Moffat County's top ten employers: Tri

- State, the Trapper Mine, and the Colowyo Coal Mine, and that Craig Station supports 100 percent of the employees at the Trapper Mine and the Colowyo Mine. The commenters stated that mining accounts for better than 18 percent of the annual labor income generated in Moffat County, and Tri

- State accounts for better than 18 percent of the property tax revenue in the county.

Commenters stated that the State of Arizona and Apache County in particular will be severely detrimentally impacted if both Coronado and Springerville power plants are forced to cease operation. The comme nters stated that Coronado and Springerville combined account for 4,009 direct, indirect, and induced jobs in all private non

- farm employment sectors in the State of Arizona (in CY2013), including 2,740 jobs in Apache County alone, and that these jobs alon e equate to $713.5 million (2013 $) real GSP, including $230.2 million (2013 $) RDPI for the State of Arizona in CY2013

. The commenters stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in gross state product, and $170 million real247 disposable personal income. The commenters estimated that over half (56%) of Apache County's property tax value could be eliminated, including two

- thirds to three

- quarters of the property value that supports the local school districts, a nd with limited alternative employment opportunities, the associated exodus of plant employees from the region could potentially result in a drop in housing values, shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library districts, fire districts, etc., currently born by the utilities and their employees.

Commenters stated that if the proposed Clean Power Plan requires the Jim Bridger Power Plant to shut its doors, approximately 350 power plant employees would lose their jobs, and an estimated 400 employees from the Jim Bridger Coal Mine and 185 employees from the Black Butte Coal Mine would also lose their jobs. The commenters stated that as a result of t his proposed plan, 935 Sweetwater County employees directly employed in the power generation and coal mining industries could be become unemployed. The commenters stated that the closing of the Jim Bridger Power Plant and Jim Bridger and Black Butte Coal M ines could result in indirect employment and economic impacts on numerous local, regional and national service companies that depend on the viability of these operations. The commenters stated that ad valorem tax revenues for these operations represent app roximately 11 % of property taxes paid in Sweetwater County. The commenters stated that if these power plant and coal related tax revenues are lost along with the tax revenues generated by the associated residential, business and industrial sectors of the economy, there will be devastating consequences for the Sweetwater County Memorial Hospital, the Sweetwater County Events Complex, Southwest Counseling Service, the maintenance of 1200 miles of roads, the provision of an effective level of law enforcement and others.

Commenters stated that the proposed rule will result in increased energy costs that will further stymy economic activity and result in additional hardship on our population, especially the 14.7% that are already living below the poverty level. The commenters stated that its county unemployment hovers around 10% annually and the loss of this plant would be devastating. The commenters stated that a large

- scale retirement of coal

- fired plants across the country would result in massive job losses, tax base loss, increase in energy costs.

Commenters stated that closure of the coal generating stations in Arizona would devastate the economies of our rural communities, where the plants support high

- wage employment and provide a critical tax base for sc hools and local governments. The commenters stated that rate increases resulting from the Proposed Rule would disproportionally affect rural consumers and exacerbate the growing problem of poverty in these areas.

Commenters stated that EPA failed to analy ze the Proposed Rule's state

- level employment and other economic impacts of [Building Block 1 and] Building Block 2. The commenters contended that the retirements that Building Block 2 in particular precipitates could have dramatic local economic impacts; for example, if any of our coal

- fired plants were forced to shut down it would mean the loss hundreds of high

- wage jobs in rural areas where there are few or no alternative employment options, devastating the local economies. Further, the commenters believ ed that these areas would remain hard hit even if new NGCC facilities were constructed close by as the siting, permitting, financing and construction of NGCCs would take several years and require less than a third of the staff required to operate coal

- fire d power plants. Commenters stated coal248 mine and craft labor job losses should also be expected. Commenters also stated that despite the extensive local economic impacts caused by Building Block 2, EPA's Regulatory Impact Assessment (RIA) only analyzes nati onal employment impacts. The commenters also stated that while the employment impacts from some aspects of the Proposed Rule may be felt across all states (e.g., demand

- side energy efficiency), the employment impact from coal plant retirements assuredly wo uld not. The commenters recommended that to appropriately analyze the Proposed Rule's economic impact, EPA should determine state

- specific employment effects.

Commenters stated that the proposed rule will destroy the pensions and healthcare of tens of tho usands of future retirees, current retirees, widows and dependents in coalfield communities across the country.

Commenters noted that the statement about jobs that are lost or gained, they believe are incomplete in the proposed rules. The commenters stated disbelief that the number of retirees that will lose their pensions and health benefits was considered, and that there is no way that this is fair, meets the requirement for human dignity, or does not have a disruptive effect on persons that have worked t heir entire lives in coal mines for pensions and health benefits. The commenters stated that the U.M.W.A. pensions are a multi

- employer pension that is funded by working miners to pay for the retiree's benefits.

Commenters stated that to cope with the inc reased energy costs this proposed rule will bring, existing businesses in Terre Haute may layoff employees, move to other states or overseas or shut their doors, and that new businesses may be deterred from coming to Terre Haute, affecting jobs, local tax revenue and the overall economic health of Terre Haute.

Commenters stated that forcing Minnesota to reduce its carbon emissions by 41% by 2030 is not fair, as midwestern states do not have to reduce by such a high percentage. The commenters stated that th is will force the shutdown of many coal power plants, eliminate thousands of jobs in Minnesota, drive the cost of power up and create a terrible burden on lower income families. The commenters stated that it would like to see No. 3 generating plant stay on line to keep some of the support and jobs in Becker, MN.

Commenters stated that requiring Minnesota to reduce carbon emissions by 41% by 2030 is cost prohibitive, too aggressive, and will hurt our economy. The commenters stated that this will force the sh utdown of many coal power plants and result in the loss of thousands of jobs (including many in his legislative district) and will drive the cost of power up, which will create a burden on all Minnesota families and especially low income families.

Comment ers stated that EPA recognized localized negative impacts of the proposed rule in its RIA. The commenters stated that the first coal mining jobs to be lost will be those at mines that produce the highest priced coal

- notably, mines in eastern Kentucky an d that the impact of this proposal will almost guarantee the broadening and deepening of the poverty already dominant in eastern Kentucky.

Commenters stated that many coal

- fired power plants, including Tri

- State plants, are located in rural areas where th e entire community is supported by the power plant. The commenters stated that the job loss will extend far beyond the jobs in the plants and mines themselves and that249 power plants are often a major source of employment and revenue for the communities in w hich they are located.

Commenters stated that should the EPA's Existing

- Source Proposal be finalized, Seminole's coal

- fired power plant will be forced to close

- leaving 300 skilled employees and as many as 600 contractors without a job. The commenters st ated that Seminole is also the largest taxpayer in Putnam County, and paid more than $5 million in property taxes in both 2013 and 2014. The commenters stated that Putnam County cannot afford to lose Seminole's coal

- fired power plant or any of the jobs ass ociated with the facility.

Commenters stated that the proposed rule will severely impact coal industry members, workers in allied industries such as rail transportation, equipment sales and manufacturing, and the communities where those activities are loc ated. The commenters stated that this regulation will put Colorado citizens at risk for lost jobs and higher electricity costs. The commenters stated that by reducing the U.S. fleet of coal

- fired generating units by more than one

- third by 2020, the regulat ion will place U. S. consumers at risk of "rolling blackouts" and service disruptions.

Commenters stated that the proposal has the potential, based on EPA 2025 IPM, to shutter over 13,000 MW of the 22,000 MW of coal fired generation in the state of Texas , including San Miguel. The commenters stated that if the EPA's IPM is correct, there are 350 power plant and mine workers at San Miguel that will be put out of work due to this rule

- a full 20 years before the useful life of the unit has been reached.

C ommenters stated that in Utah, coal

- fueled electricity is responsible for meeting approximately 80% of the state's energy needs, and it is crucial that Utah maintains the economic development competitiveness that coal provides. The commenters stated that t he coal mining industry is one of the most important industries in the State of Utah, due not only to the number of jobs supported by the coal industry, but also to the economic linkages with other sectors of the economy and the high wages in the mining in dustry relative to other sectors of the Utah economy. The commenters stated that these high

- paying coal mining jobs are located in a rural part of the state in which it would be difficult, if not impossible, to replace them.

Commenters stated that the CPP will drive manufacturing and jobs out of state and overseas. The commenters stated that the proposed rule will impose costs on U.S. businesses in numerous ways without meaningfully reducing global GHG emissions.

Commenters stated that to cope with the in creased energy costs this proposed rule will bring, existing businesses in Terre Haute may lay off employees, move to other states or overseas or shut their doors, and that new businesses may be deterred from coming to Terre Haute, affecting jobs, local ta x revenue and the overall economic health of Terre Haute.

Commenters stated that coal job losses and rising electricity prices pose a threat to Kentucky consumers and our essential industrial manufacturing economy. The commenters stated that it is irrespo nsible for EPA to suggest that a $2 billion loss to our state gross domestic product coupled with a ten percent increase in electricity costs is "modest". The commenters stated that the proposed rule would strand another $4.5 billion previously invested in existing assets to achieve250 compliance with the existing mercury and air toxins standard. The commenters stated that EPA must consider reasonable safety net provisions.

Commenters stated that the IPM model improperly assumes that compliance actions relat ed to existing generating assets and construction of new generating assets could be deployed in 2016 and does not consider the time necessary to put in place accompanying regulatory, legislative and compliance decisions. The commenters stated that virtual ly all of the reductions in CO2 emissions from affected EGUs come from reduced utilization of coal

- fired EGUs and that EPA must determine the diminution in asset value to the owners of those existing sources, and the local and regional economic disruption and unemployment that would result from the proposal.

Commenters stated that the dedicated Union Mine Forest at the Deserato Coal Mine in Western Colorado, is the largest employer in the county and that part of the state. Commenters stated that community relies on that coal plant and coalmine and the only market for the coal from that mine is the Bonanza Plant. Commenters stated that reductions in output at the Bonanza Plant mean reductions at the coalmine and those miners and their family have invested in years of mortgages for their homes and need careers that will last.

Commenters stated that, in addition to the impact on electric rates, these retirements will cause jobs to be lost and will have adverse impacts on local economies and local government tax revenues. The commenters stated that these impacts have already been seen in the local economies of the areas where plants have already been shut down. Commenters stated that closing this much generation in such a short timeframe also raises serious c oncerns about the ability to maintain reliability and meet peak demand, especially during extreme weather. The
commenters assumed there are still federal requirements that a utility maintain an adequate generation reserve, so reliability is attained.

Commenters noted that the elimination of coal plants will impact the pension and health care benefits of retired coal miners and their families.

Response 5.b. : While the EPA expects that there is likely to be additional job loss in sectors related to coal attributable to implementation of the CPP , many jobs in this field are expected to remain. For example, the Department of the Interior continues to work on an environmental impact statement to evaluate the potential environmental impacts of extending the o peration of the Navajo Generating Station (NGS) and production of coal at the nearby Kayenta Mine for an extra 25 years, through 2044.

The EPA recognizes that the coal miner or coal plant worker who loses his or her job is not necessarily going to find a new job in energy efficiency or renewable energy. In response to the transition from coal to natural gas already underway due to lower natural gas prices, many states are implementing replicable programs to transition their workforces

– by working in publi c

private partnerships with their community colleges and businesses

- to secure an economic advantage as they transition to a lower carbon energy mix. In addition, a new federal initiative began i n 2015: the Partnerships for Opportunity and Workforce and E conomic Revitalization (POWER). It leverages a wide variety of federal economic and workforce development resources with the specific goal of providing assistance to communities negatively affected by recent and251 future shifts in the coal industry and power sector. As part of the initiative, the Department of Commerce, Department of Labor, Small Business Administration, and the Appalachian Regional Commission have together created an initiative to issue grants to partnerships of regionally

driven economic de velopment and workforce development organizations in impacted coal communities. 4 In addition, the Department of the Interior has publically committed in the July 2014 Technical Working Group Agreement to facilitate the development of approximately 26,975,000 MWh of clean energy by December 31, 2035 in the Four Corners area. The EPA
exp ect s this commitment to support energy

- sector and other jobs in the region.

The EPA recognizes the contribution of power plants and coal mines to the economies of the Navajo Nation, t he Hopi Tribe and surrounding communities in Arizona and New Mexico, as

w ell as many other communities nationwide. The ten year timeframe of the CPP from plan development to plan implementation allows states, utilities and other stakeholders the ability to work together to tailor their plans in the ways that best support their communities, so that they can not only reduce their greenhouse gas emissions, but also ease the transition of their workforces to the low carbon economy.

5.c. Commenters state generally that the Clean Power Plan will result in job loss.

Commenters propose d that implementation of the rule would cause serious economic harm, reduce energy diversity, increase electricity prices, jeopardize grid reliability, result in major job losses, hinder coal technology advances and fail to achieve the administration and E PA's goal of global leadership on CO2.

Commenters expressed concern that the rule would substantially increase electricity and natural gas costs, create liability problems, put the manufacture sector at risk, and reduce good paying jobs with relatively sma ll global climate impact. The commenters cited EPA’s estimates that the proposed rule would reduce 730 million metric tons of carbon by 2030 but then stated that China increased its emissions nearly that same amount in one year.

Similarly, commenters stat ed that the proposed regulations are likely to increase worldwide greenhouse gas emissions by decreasing the international competitiveness of U.S. businesses due to increased energy costs and moving businesses to areas with less efficient and more carbon i ntensive energy supplies. The commenters further stated that under this proposal the total cost of the products produced in the U.S. will need to increase, eroding our international competitiveness and resulting in the loss of U.S. Manufacturing jobs, desp ite businesses investing in cost effective energy savings activities for decades.

Commenters discussed impacts to American refineries, manufacturing, other businesses and hardworking American consumers such as less affordable and less reliable energy, los s of jobs, and elimination of fuel diversity. The commenters stated that the proposed EPA rule ignores the successful example of our free market and guarantees adverse consequences for nearly every

4 See https://www.whitehouse.gov/the

- press

- office/2015/03/27/fact

- sheet

- partnerships

opportunity

- and

- workforce

- and

- economic

- revitaliz

.252 consumer and business in the U.S. The commenters further s tated that the proposed rule threatens our industry's international competitiveness due to higher energy costs.

Commenters stated that electric utilities need more time to build replacement generation and make significant investments in transmission and ot her mitigation to maintain reliability. The commenters recall when our overall environment was nowhere near the quality we have now, and the soot in the air represented progress. The commenters also recalled that back then, thoughts of the long term ramifi cations were not paramount, that we are now much smarter, and we have made great strides in cleaning up our emissions. However, the commenters noted that now is not the time to make these draconian demands on our country's energy infrastructure. The

commen ters stated that the loss of jobs, coupled with the drastic increases in electricity rates, will create a huge burden on our citizens. Commenters felt that we should strive to continue the technological advances that have already provided us with a much cl eaner environment; however, arbitrary deadlines and unproven benefits will only harm our still fragile economy.

Commenters stated that under the proposed guidelines, EPA projects that its proposed Clean Power Plan will increase electricity prices by a nat ionwide average of 4 percent to 7 percent, will increase natural

- gas prices by 9 percent to 12 percent, and will cause the retirement of 46,000 megawatts to 49,000 megawatts of coal

- fueled electric

- generating capacity. The commenters stated that the EPA's proposal will have a major impact on energy resources, electric ratepayers, jobs, and the economy of the Midwest region.

Commenters stated that the 16 states in the Southern States Energy Board region currently produce over 50 percent of the U.S. energy supply, and $5 trillion of the nation's $16 trillion economic output with a commensurate number of high quality jobs in the manufacturing and agriculture sectors with much lower electricity rates and higher economic growth than states with self

- imposed car bon limits.

Commenters cited findings from a national survey that a majority believe the United States cannot afford new costs and potential job losses resulting from the EPA regulations; nearly half of those polled say they are not willing to pay a singl e dollar more in their energy bill to accommodate the new EPA regulations; and 47 percent oppose the regulations

. The commenters stated that these findings are mirrored on a state level in Arkansas, and the Proposed Rule is dependent in many instances on c hanges in state law and state regulations, and elected state and local officials will not be willing to enact legislation or approve regulations that result in such far

- reaching and expensive effects on their constituents.

Commenters stated that foreign d irect investment (FDI) has also led to the creation of 2,118 new direct jobs in 2014, or 45 percent of new announced jobs. The commenters stated that this investment will be jeopardized by rising energy costs due to the proposed rule. The commenters stated that they were concerned both about their ability to attract new businesses, as well as about the ability of current businesses to continue to operate.

Commenters stated that the cost of this rule is additive to the costs from several other EPA rules,

su ch as the Mercury MACT rule, the Refinery Sector Rule proposal and the Cross State Air Pollution Rule. Further still, the EPA will implement lower ozone standards by 2015. The commenters stated that even before the regulation's requirements are taken into account, seven of253 the EPA's final or pending regulations are projected to cost the economy more than $60 billion per year in lost GDP and will cause the annual loss of nearly 900,000 jobs.

Commenters stated that the rule presents a significant threat to A merican jobs and the economy. The commenters stated that increases in electricity costs will place an immense burden on U.S. businesses for which affordable energy provides a critical operating advantage in competitive global markets.

Commenters stated th at the effective ban on coal

- based power will cause the loss of thousands of jobs, directly and indirectly. The commenters stated that in order to absorb higher electricity costs, businesses will be forced to reduce their workforce and increase the prices of their products, leading to an overall rise in the cost of living. The commenters stated that the potential combination of price increases and job losses constitutes an unacceptable hardship for Georgia families. The commenters stated that relying on le ss fuel sources is a grave threat to our grid security. The commenters stated that effectively eliminating coal from our energy portfolio will impede global competitiveness.

Commenters stated that the EPA should consider a reasonable path forward that doe s not exceed EPA's statutory authority, that supports American jobs and the economy, that maintains electric reliability, that does not place American industry at a competitive disadvantage with industry in other countries, that is based on a realistic glo bal plan that is practically enforceable, and that allows all our energy sources to play in a role in America's energy future while maintaining America's low cost energy competitive advantage. The commenters stated that NSA and NYS produce steel with much lower emission rates per unit of output, including for greenhouse gases, than many other integrated domestic and foreign steel mills, including Chinese, Russian and Indian steel mills.

Commenters stated that since energy is commonly one of the highest cos ts and key inputs to energy intensive industrial companies, any regulation which increases electricity prices while reducing electricity reliability will necessarily harm the international competitiveness of U.S. industry and ultimately cost good, family s ustaining jobs.

Commenters stated that regulating GHG emissions from the manufacturing sector is neither necessary nor sensible at this time, particularly given that so many industries have already been reducing GHG emissions through voluntary and extensi ve energy efficiency initiatives. The commenters stated that imposing uniform GHG standards of performance on non

- EGU source categories could disadvantage these sectors by making them less competitive on the global stage. The commenters stated that new reg ulations with high compliance costs that do not account for trade exposure will translate into significant job losses and reductions in economic activity without actually reducing GHG emissions.

Commenters stated that the U.S. should not risk rising elect ricity prices and diminished fuel diversity in the absence of legally binding commitments from China, India, and other major developing nations. Doing so would increase domestic job losses and accelerate off

- shoring of
energy

- sensitive industries.254 Comment ers stated that lacking competitive, stable electricity prices, manufacturers and businesses will be driven offshore or out of business. The commenters stated that if industry is driven away from the U.S. due to EPA regulations, it will likely be to count ries with cheaper energy, lower labor costs, and less stringent environmental requirements and thus will have the unintended and ironic consequence of raising global carbon emissions and overall emissions. The commenters cited Philip Moeller, that EPA is e ssentially capping the amount of national electricity consumption in 2030. The commenters stated that the impacts of carbon reduction policies in other advanced economies around the world including Australia and Europe caused economic harm and job loss fr om excessive regulations.

Commenters stated that increased electricity and natural gas prices will decrease manufacturing competitiveness, increase the competitive advantage of our offshore competitors, decrease U.S. jobs, increase imported manufactured g oods and cause a larger trade deficit. The commenters stated that the shifting of manufacturing jobs offshore and to countries that have less stringent laws and regulations governing the emissions of greenhouse gases and other pollutants entails the deteri oration of domestic employment and economic activity, as well as increased overall emissions worldwide.

Commenters stated that the Clean Power Plan does not address the leakage problem, that higher energy rates lead to higher production costs and most ind ustries cannot easily pass along those higher costs to their customers; thus making US industries less competitive and vulnerable to foreign competition. The commenters stated that the EPA's plan would make it economically infeasible for numerous businesse s to remain in the US; thus causing potential massive job dislocation. The commenters stated that the evidence points to regulations that were drafted by wealthy climate activists and special interest groups without regard for the impact these over

zealous regulations would have on American families and businesses. The commenters stated that there does not appear to be a scientific

- based justification for the EPA's 30% CO2 reduction proposal.

Commenters stated that the manufacturing sector consumes 26% of U.S. electricity and 29% of U.S. natural gas, and requires affordable energy prices to compete with global competition, create jobs, and to generate economic growth. The commenters stated that as electricity and natural gas prices rise, manufacturing facil ities move overseas to remain competitive. The commenters stated that jobs as well as GHG also move overseas, referred to as "GHG leakage." The commenters stated that by creating such a costly and burdensome regulation, the EPA will effectively send U.S. j obs overseas thus causing GHG to instead migrate. The commenters stated that unless the measures set forth in the CPP are addressed and actually implemented with consideration of potential international impacts, all that the CPP will accomplish is to harm the U.S. economy by causing job losses or job relocations and increased overall emissions.

Commenters stated that the CPP might make the cost of doing business in the U.S. so high that companies move their operations overseas to countries with fewer envir onmental regulations than the U.S. The commenters stated that EPA does no analysis to account for potential economic "leakage" that may occur as a result of the CPP and the Agency's assessment of the CPP's effect on emissions is incomplete and hopelessly o ptimistic. The commenters cited the Maguire Energy Institute that regulatory burdens of this sort imposed on energy prices and energy supply cause plant closures and maximize the potential that manufacturing jobs will255 move overseas. The commenters cited th e International Energy Agency that such leakage can result in the increase in emissions outside a region as a direct result of the policy to cap emission in this region.

Commenters stated that U.S. industries are some of the most efficient in the world both in terms of energy use and GHG emissions and that in 2010, the GHG emission intensity of the U.S. economy, measured by total carbon dioxide emissions divided by GDP, wa s 31 percent below the worldwide average and 67 percent below that of nations that are not part of the Organization for Economic Cooperation and Development. The commenters stated that based on current projections, worldwide energy

- related CO2 emissions wi ll rise approximately 20 percent by 2035 while U.S. emissions are projected to be relatively flat; thus, the carbon intensity of the U.S. economy is set to drop even further when compared to worldwide averages and non

- OECD nations. The commenters stated th at if the Administration adopts policies that substantially increase the cost of energy

- thereby decreasing the competitiveness of U.S. industries

- investments and emissions will be sent to other, less efficient countries with higher CO2 emissions intens ities and, as a result, overly restrictive and costly U.S. policies to reduce emissions will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions. The commenters recomm ended that a more effective policy approach for lowering global GHG concentrations would be to promote

on

- shoring of jobs and production from more carbon intensive countries to the less carbon intensive U.S. economy.

Commenters stated "The scientifically flawed SCC computational process attempts to compute the future global warming damage to the entire world

- wide population that would be avoided by each ton of CO2 not emitted by U.S. sources and count that highly uncertain world

- wide avoided damage as a be nefit of the regulation. But the SCC cost/benefit analysis only burdens the U.S. economy and population (not the entire world) with the immediate cost impacts from issuance of the regulations. This will result in much higher US energy costs and loss of job s to other countries with lower coal

- produced energy costs that do not choose to bear the burden of CO2 emissions control."

Commenters stated that because Texas businesses compete on a global scale, rising electricity prices resulting from the proposed st andards will place the state, and the nation, at a disadvantage globally. The commenters stated that some businesses would choose to move overseas, taking their emissions

- which will be less controlled or uncontrolled altogether

- and their jobs with them

. Commenters suggested that the proposed rule does not strike a balance between climate change goals and economic impacts such as job losses, trade balances, and costs of electricity, goods and services. Commenters stated that policies must ensure that lo w and fixed income consumers are not disproportionately impacted and further suggested that all sources of GHG and economic sectors should be included in initiatives to reduce emissions. Commenters urged the EPA to think about the economic calamity we face around the world if the lights went out, if electricity became too costly for families who are struggling to pay their bills every month or seniors who spend more time in their homes than most but cannot afford excessive heating or cooling bills. The comm enters stated that businesses rely more than ever before on electric power to boot their computers, charge their technology and power equipment to be successful.256 Commenters cited a US Chamber of Commerce estimate that through 2030, new carbon regulations would, on average, lower U.S. Gross Domestic Product by $51 billion annually, with a peak decline of over $100 billion in 2025; result in the loss of more than 220,000 jobs annually, peaking at 422,000 in 2022; and lower U.S. household total disposable inc ome by more than $580 billion.

Commenters cited NERA estimates of an average nationwide electricity rate hike of 12 percent. The commenters stated that EPA left several important cost inputs out of its modeling efforts, including the cost of new electrici ty and gas transmission projects that will be required to satisfy the requirements of the CPP. The commenters cited independent experts statements that EPA may have overestimated the degree of heat rate efficiency improvements achievable at power plants b y as much as a factor of three, that EPA made optimistic projections about the feasibility of increased natural gas use, that EPA failed to include the need for excess natural gas capacity to fill

- in for intermittent renewable energy resources, and that EP A made across

- the

board assumptions about the future of energy efficiency based entirely on past achievements and not at all on the feasibility of future realizations. The commenters stated that higher energy prices will produce a ripple effect throughout the U.S. economy that will shutter businesses, deter hiring, cause layoffs, increase the price of essential goods and services, and increase the cost

- of

living for all Americans, particularly people living on fixed incomes. The commenters cited studies sh owing that unemployment, and economic malaise more generally, take an appreciable toll on the health and well

- being of Americans by increasing the likelihood of hospital visits and illnesses, raising healthcare costs, and putting stress on families.

Comme nters stated that the rulemaking notice severely underestimates direct compliance costs. The commenters stated that the agency has made no effort to assess the Proposed Rule's full effect on economic productivity and employment. The commenters stated that more comprehensive analyses predict compliance costs of $480 billion by 2030, an average annual negative impact on GDP of $50 billion, and an average annual net decrease in employment of over 200,000 jobs.

Response 5.c. : The EPA disagrees with commenters who assert that electricity prices are going to rise so dramatically as to cause widespread job loss, or to cause U

. S

. industries to be driven overseas. Below in section 8.6 comment 5 ( titled: Commenters cite results from specific reports issued by stakeho lder groups ), the EPA discusses problems with the analyses in specific reports that make such assertions. The EPA acknowledges that there will be additional job loss in certain sectors of the economy associated with fossil fuel, and that is discussed earli er in section 8.6, comment 5 ( titled: Commenters state that the Clean Power Plan will result in loss of jobs related to coal as well as Commenters state that the Clean Power Plan will cause job loss in specific locations) and in the RIA.

5.d. Commenters st ate that energy efficiency creates more jobs than gas or coal.

Commenters stated that a popular measure is to estimate jobs per dollar invested. The commenters stated that in the electricity space, a comparative analysis of efficiency compared to generatio n found that efficiency created twice as many jobs per dollar spent on nuclear power and 50% more jobs than coal and gas generation, and these large increases in economic activity lead to increases in employment. The commenters stated that the effect is ma gnified by the fact257 that the non

- energy sectors of the economy are substantially more labor intensive than energy production, and the energy sector is less than half as labor intensive as the rest of the economy. The commenters puts forward that this effec t is compounded where energy is imported (as in the U.S. transportation sector), and as consumers substitute away from energy, the goods and services they purchase stimulate economic and disproportionately large job growth. The commenters remarked that the se efforts to model the economic impact of energy efficiency have proliferated with different models being applied to different geographic units, including states and nations. The commenters stated that the results differ across studies because the models are different, the impact varies according to the size of the geographic unit studied and because the assumptions about the level and cost of energy savings differ. The commenters noted that these differences are not an indication that the approach is wron g; on the contrary, all of the analyses conclude that there will be increases in economic activity and employment, and given that there are different regions and different policies being evaluated, we should expect different results. The commenters stated that, taken together, the overestimation of costs and underestimation of benefits lead to a substantial and systematic underestimation of the net benefits of efficiency gains, and because the impact of the efficiency improvements depends on (a) the size of the improvement and (b) the type of consumer durable being studied, (c) the sector in which it occurs and (d) the region being analyzed, one cannot offer a single, simple estimate. The commenters stated that the exact calculation of costs and benefits is likely to underestimate the benefit/cost ratio by a factor of at least two because of the failure to reflect the macroeconomic benefits and cost reducing trends, both of which are positive externalities of the adoption of performance standards.

Response 5 .d. : The EPA recognizes that studies assessing implementation of energy efficiency measures across the country have shown increases in employment, and that many measures taken to increase efficiency are labor

- intensive. For example, weatherizing buildings directly employs energy auditors and construction workers. While it is difficult to precisely estimate, much of the economic activity that is created it does increase employment directly. For example, there may be more machinists to manufacture new energy efficient appliances and equipment, construction workers to weatherize homes and buildings, service providers to conduct energy audits, and engineers and programmers to improve building energy management systems.

5.e. Commenters state that the Clean Power Plan should have analyzed state and local effects.

Commenters stated that EPA failed to analyze the Proposed Rule's state

- level employment and other economic impacts of Building Block 1 and Building Block 2. The commenters contended that the retirements t hat Building Block 2 in particular precipitates could have dramatic local economic impacts; for example, if any of our coal

- fired plants were forced to shut down it would mean the loss hundreds of high

- wage jobs in rural areas where there are few or no alt ernative employment options, devastating the local economies. Further, the commenters believes that these areas would remain hard hit even if new NGCC facilities were constructed close by as the siting, permitting, financing and construction of NGCCs would take several years and require less than a third of the staff required to operate coal

- fired power plants. Coal mine and craft labor job losses should also be expected. Commenters also stated that despite the extensive local economic impacts caused by Bui lding Block 2, EPA's Regulatory Impact Assessment (RIA) only258 analyzes national employment impacts. The commenters also stated that while the employment impacts from some aspects of the Proposed Rule may be felt across all states (e.g., demand

- side
energy e fficiency), the employment impact from coal plant retirements assuredly would not. The commenters recommends that to appropriately analyze the Proposed Rule's economic impact, EPA should determine state

- specific employment effects.

Response 5.e. : Because states have broad flexibility in tailoring programs to meet their goals, we cannot predict exactly where specific impacts will occur, although we know they are not spread evenly across the country.

The national jobs estimates we have provided are illustra tive

– they represent one possible implementation scenario. The analysis relies on projections and costing analysis from the IPM model, which uses industry

- specific data and assumptions to estimate costs and energy impacts of the CPP. The EPA uses IPM to p redict coal generating capacity that is likely to undertake improvements in heat rate efficiency, and also to predict impacts of the CPP on fuel use, retirement of existing units, and construction of new ones. The IPM expenditure predictions are distribute d across different labor categories. The EPA does, however, recommend that states in designing their state plans, consider the effects of their plans on employment and overall economic development to assure that the opportunities for economic growth and jo bs that the plans offer are manifest. See Section VIII.G.3 of the preamble. The IPM model makes specific choices that may or may not match what states decide to do. For example, IPM assumes that units slated to retire will tend to all retire by 2020. In the real world, states and utilities will have the flexibility to change the timing and magnitude of retirement decisions, as long as they can meet their goals. In addition, the EPA anticipates positive employment impacts

– job gains

– in
many areas as a r esult of increased investment in demand

- side energy efficiency and renewable
energy.

5.f

. Commenters state that the Clean Power Plan will have a variety of negative ripple effects through the economy.

Commenters stated the Plan callously disregards the imp act of increased energy costs that have a domino impact on every step in the supply chain resulting increased costs of our goods and services, reduced competiveness and job losses.

Commenters stated that new GHG emission requirements will have a large and immediate impact on the job climate across our state, and much of that impact will be felt in my community where a large portion of the economic activity relies on coal

- based energy production. The commenters further stated that Indiana County and the nei ghboring areas are home to a number of affected EGUs (including Conemaugh Generating Station, Keystone Generating Station, Seward Generating Station, and the Homer City Generating Station) and that these power plants serve as lynchpins of the local economy , with extensive direct, indirect, and downstream economic impacts. The commenters referred to the Homer City Generating Station, which is located in the middle of the district, as an example of how important all of these power plants are to the local econ omy. The commenters noted that in terms of direct employment, this facility employs more than 250 local men and women, and many of these employees are unionized and receive significant family

- sustaining benefits packages. The commenters stated that the ind irect economic activity generated by the Homer City Generating Station supports the companies that259 provide services and products for the plant's operations, including coal mines, the coal truck operators, the rail transportation infrastructure that carries coal to the power plant, the scrubber byproduct processing facilities, and a water treatment facility to process the plant's wastewater. The commenters estimated that the nearby Homer City Coal Cleaning Plant employs 50; the related coal mining operations employ between 350 and 450 individuals; and between 250 and 350 coal truck drivers deliver coal to the power plant. However, the commenters stated that it is the downstream impact that best demonstrates the power plant's importance to the community, and t he economic ripple effect extends well beyond the hundreds of employees who report to work each day. The commenters estimated that the facility is responsible for the purchase of $395 million worth of goods and services every year in the local area, and th at figure represents a significant amount of economic activity for any locale, much less in our portion of Western Pennsylvania. The commenters stated that every dollar spent in the community is recycled many times, supporting everything from direct vendor s to the power plants and their suppliers to byproduct processing companies to the local restaurants, and that the taxes generated from this economic activity create tax revenue that is critical to municipal governments and school districts. The commenters noted that the ongoing installation of a scrubber system underscores the importance of the Homer City Generating Station, with a cost of nearly $750 million, and the project demonstrates a long

- term commitment to the environment, the needs of the power gr id, and the local community.

Commenters stated that the retirements Building Block 2 precipitates would have dramatic local economic impacts. The commenters stated that shutting down the Coronado and Springerville Generating Stations in Apache County, Ar izona, would cause over 4,000 individuals to lose their jobs, nearly 70 percent of which are located in Apache County, and cut $600 million in annual gross state product from Apache County. The commenters stated that with limited alternative employment opp ortunities, the resulting exodus of plant employees would depress County housing values, shutter local businesses, and county services would be curtailed as remaining County residents would be unable to alone shoulder the entire financial burden of support ing communal services, such as schools, medical centers, library districts, and fire districts. The commenters stated that the RIA only analyzes national employment impacts. The commenters stated that the Proposed Rule must give the states greater discreti on in determining the appropriate performance standards for affected units.

Commenters stated that the proposal would have tremendous impacts on the communities where Tri

- State owns and operates coal

- fired EGUs if those EGUs are forced to shut down or to curtail their operations severely. The commenters stated that when indirect impacts of Craig Station are taken into account, the plant is responsible for $489.6 million in regional total output. The commenters stated that Craig Station is responsible for p roviding three of Moffat County's top ten employers: Tri

- State, the Trapper Mine, and the Colowyo Coal Mine, and that Craig Station supports 100 percent of the employees at the Trapper Mine and the Colowyo Mine. The commenters stated that mining accounts f or better than 18 percent of the annual labor income generated in Moffat County, and Tri

- State accounts for better than 18 percent of the property tax revenue in the county.

Commenters stated that the State of Arizona and Apache County in particular will be severely detrimentally impacted if both Coronado and Springerville power plants are forced to cease operation. The commenters stated that Coronado and Springerville combined account for 4,009260 direct, indirect, and induced jobs in all private non

- farm em ployment sectors in the State of Arizona (in CY2013), including 2,740 jobs in Apache County alone, and that these jobs alone equate to $713.5 million (2013 $) real GSP, including $230.2 million (2013 $) RDPI for the State of Arizona in CY2013

. The commente rs stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in gross state product, and $170 million real disposable personal income. The commenters estimated that over half (56%) of Apache County's property tax value co uld be eliminated, including two

- thirds to three

- quarters of the property value that supports the local school districts, and with limited alternative employment opportunities, the associated exodus of plant employees from the region could potentially resu lt in a drop in housing values, shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library districts, fire districts, etc., currently born by the utilities and their employees.

Commenters stated that if the proposed Clean Power Plan requires the Jim Bridger Power Plant to shut its doors, approximately 350 power plant employees would lose their jobs, and an estimated 400 employees from the Jim Bridger Coal Mi ne and 185 employees from the Black Butte Coal Mine would also lose their jobs. The commenters stated that as a result of this proposed plan, 935 Sweetwater County employees directly employed in the power generation and coal mining industries could be beco me unemployed. The commenters stated that the closing of the Jim Bridger Power Plant and Jim Bridger and Black Butte Coal Mines could result in indirect employment and economic impacts on numerous local, regional and national service companies that depend on the viability of these operations. The commenters stated that ad valorem tax revenues for these operations represent approximately 11 % of property taxes paid in Sweetwater County. The commenters stated that if these power plant and coal related tax

rev enues are lost along with the tax revenues generated by the associated residential, business and industrial sectors of the economy, there will be devastating consequences for the Sweetwater County Memorial Hospital, the Sweetwater County Events Complex, So uthwest Counseling Service, the maintenance of 1200 miles of roads, the provision of an effective level of law enforcement and others.

Commenters stated that for many coal

- fired plants, reaching these extreme goals in such a short period of time will prov e either economically unfeasible or physically impossible (or both), thus forcing their premature retirements. The commenters stated that the proposed rule will end up slashing not CO2 emissions, but thousands of good

- paying middle

- class jobs instead. The commenters cited projections of retirement of about 12 percent to 19 percent of all coal

- fired capacity projected to be in service in the base case) by 2020 under the range of scenarios analyzed, and its impact on well over 135,000 stable, well

- paying jobs for middle

- class families that the industry provides. The commenters stated the most obvious consequence of the widespread closure of coal

- fired power plants will be massive job losses. The commenters stated that the agency's plans also would result in th e loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries.

Commenters stated that as plants close or scale back operations, the loss of jobs and tax income in communities across the re gion will be a significant blow to the economy.

Commenters stated that a shift away from coal will significantly increase the cost of electricity, and that in turn will have a very significant cascading impact on GDP. The commenters stated261 that that incre ased costs of electricity will translate into fewer jobs for Americans in all sectors of the economy.

Commenters stated that the proposed rule will severely impact coal industry members, workers in allied industries such as rail transportation, equipment sales and manufacturing, and the communities where those activities are located. The commenters stated that this regulation will put Colorado citizens at risk for lost jobs and higher electricity costs. The commenters stated that by reducing the U.S. fleet of coal

- fired generating units by more than one

- third by 2020, the regulation will place U. S. consumers at risk of "rolling blackouts" and service disruptions.

Commenters stated that these job losses will have a ripple effect in the communities throughou t the coalfields and beyond, where more than 208,000 jobs will be lost by 2030.

Response 5.f. : The EPA agrees that plant closures affect other businesses that provide them with materials and fuels, and that closures also affect businesses in local communities where their employees spend their pay. However, the Clean Power Plan employment analysis i llustrates not only decline s in employment in some sectors (such as coal generated power) but also an increase in employment in other sectors (such as demand

- side energy efficiency). The sectors experiencing growth will positively affect their suppliers an d positively affect businesses where their employees spend their pay.

The power sector of the 21 st century is going to look somewhat different from the power sector of the 20 th century, and the EPA recognizes that the transition is not going to affect eve ryone equally. That is why, as stated above, the CPP provides a ten

- year timeframe from plan development to plan implementation. The ten

- year timeframe allows states, utilities

, and other stakeholders to work together to tailor their plans in the ways that best support their communities, so that they can not only reduce their greenhouse gas emissions, but also ease the transition of their workforces to the low carbon economy.

5.g. Commenters state that EPA should have done economy

- wide modeling for the Clea n Power Plan.

Commenters stated that EPA's analysis of the employment impacts of the Proposed Rule was arbitrary and capricious because EPA only evaluated employment impacts in a few select industries. The commenters stated that EPA's partial economy mode l failed to address impacts in the communities that support coal

- fired electricity generation and on consumers of electricity. The commenters stated that a whole economy model must include employment across a wide range of sectors, sufficient detail at the regional level to identify changes in the regional distribution of output and employment, international trade flows to evaluate how regulations will affect tradable sectors and dynamic analyses to examine adjustments in labor and capital markets in respon se to regulations over time.

Commenters stated that EPA's assessment of labor impacts ignores the largest labor impacts, which are the indirect jobs impacted as a result of higher energy costs. The commenters stated that higher natural gas prices and elec tric rates will result in the economic dislocation of some industries, particularly those industries that are energy intensive, as they are unable to fully pass262 thru the higher cost of electricity and natural gas to their consumers and customers. The

comme nters stated that EPA must consider these indirect job impacts in the RIA.

Commenters stated that manufacturers rely on secure and affordable energy to compete in a tough global economy, and that manufacturers' recent gains are largely due to the abundanc e of affordable energy we now enjoy. The commenters stated that manufacturers across CSX's 23

- state network, have invested more than $14 billion in rail

- served facilities, creating more than 14,000 jobs over the last five years. The commenters stated that in 2013, $3 billion in customer investments generated more than 1,600 new job opportunities. The commenters stated that economic productivity and environmental progress could be undermined by the Proposed Rule and EPA's failure to analyze foreseeable econ omic impacts.

Commenters stated that EPA failed to meaningfully consider employment impacts of Clean Air Act regulations by not using whole economy modeling that would have captured a much more accurate picture of the likely job losses from this proposal. The commenters further stated that EPA failed to undertake an employment analysis under Section 321A of the Clean Air Act, which requires the continuous review of potential job losses and shifts in employment due to the implementation of the act.

Commente rs stated that the RIA does not capture various indirect employment impacts and provided an economy

- wide assessment of the rule's impact on employment that captured the employment impacts of the rule not only for directly affected industries (similar to EP A) but also for industries that may be indirectly affected by the rule. The commenters estimated that the GDP and employment effects of the rule are small but positive. The commenters stated that by 2025, total employment would increase by more than 200,00 0 and increase by 263,000 by 2040. The commenters stated that the increases in electricity efficiency brought about by the rule represent increases in multi

- factor productivity, which stimulates the economy by raising its potential supply (how much output can be produced with given resources). The commenters stated that the efficiency investments are a cost to some industries and consumers, but represent increased demand for the industries producing the goods and services necessary to accomplish those inves tments. The commenters stated that reductions in electricity demand have negative impacts on employment and investment in the electric power industry, as well as on output and jobs in the coal and gas producing industries. The commenters estimated that ca rbon emissions would fall to 5104 million tons by 2040 under the proposed rule, compared with 5710 million tons in the reference case, with most of the reduction is in the electric power sector.

Commenters stated that EPA failed to adequately or reliably analyze the potential costs and benefits of the proposed CPP; by simultaneously overestimating the potential benefits of the proposal and underestimating the costs, EPA claims (in error) that the proposed rule will produce economic benefits. According to t he commenters, if done properly, a cost

- benefit analysis of the CPP would reveal significant costs in both the short term and the long term. The commenters stated that first, EPA' s reliance on the social cost of carbon is wholly inappropriate because that calculation has not been subject to a rigorous and transparent rulemaking process, and it fails to address properly international benefits and costs; second, EPA fails to use full

- economy modeling to evaluate employment impacts, which fails to account for the negative impact on employment likely to be experienced by other industries that support or rely upon coal generation and the communities surrounding them; and finally, EPA's reliance on co

- benefits263 from simultaneous reductions in pollutants other than GHGs is misplaced and must be revised to more appropriately reflect the health benefits that would actually he attributable to this proposed rule.

Response 5.g. : To support the Transport Rule proposed in the summer of 2010, among other rulemakings, the E PA used the Economic Model for Policy Analysis (EMPAX) to estimate the effect of impacts projected by the Integrated Planning Model (IPM) on markets outside the electricity sector. EMPAX is a dynamic computable general equilibrium (CGE) model that forecast s a new equilibrium for the entire economy after a policy intervention. While the external Council on Clean Air Compliance Analysis (Council) peer review of this study stated that inclusion of benefits in an economy

- wide model, specifically adapted for use in that study, “represent[ed] a significant step forward in benefit

- cost analysis,” EPA recognizes that serious technical challenges remain when attempting to evaluate the benefits and costs of potential regulatory actions using economy

- wide models. Cons istent with the Council’s advice regarding the importance of including benefit

- side effects demonstrated by the 1990 to 2020 Clean Air Act study, and the lack of available multi

- year air quality projections needed to include these benefit

side effects, EPA has not conducted CGE modeling for this final rule.

However, the EPA recognizes that serious technical challenges remain when attempting to evaluate the impacts of potential regulatory actions using economy

- wide models. The EPA has therefore established a Science Advisory Board (SAB) panel on economy

- wide modeling to consider the technical merits and challenges of using this analytical tool to evaluate costs, benefits, and economic impacts in regulatory development. The EPA will use the recommendations an d advice of this panel as an input into its process for improving benefit

- cost and economic impact analyses that are used to inform decision

- making at the agency. The panel will also be asked to identify potential paths forward for improvements that could address the challenges posed when economy

- wide models are used to evaluate the effects of regulations. While the purpose of the SAB process is not to peer review any particular economy

- wide model, it is worth noting that one of the charge questions to the SAB asks if there other economy

- wide modeling approaches that EPA could consider in conjunction with CGE models.

The advice from the SAB panel formed specifically to address the subject of economy

- wide modeling will not be available in time for this promu lgation. Given the ongoing SAB panel on
economy

- wide modeling, the uncertain nature of the ultimate energy price impacts due to the compliance flexibility for states, and the ongoing challenges of accurately representing costs, energy efficiency savings an d economic benefits in economy

- wide modeling, the RIA for the CPP proceeds by presenting the energy impacts associated with the illustrative scenarios analyzed in the RIA (presented in Chapter 3), and then presents a qualitative discussion of the factors t hat will, in part, determine the timing and magnitude of effects in other markets (Chapter 5).

With respect to the requirements of section 321A of the Clean Air Act, EPA disagrees with this comment. Section 321(a) does not require EPA to conduct employment evaluations as part of the rulemaking process or as a prerequisite to the issuance of a rule. The broad language of Section 321(a) does not address the scope, frequ ency, or timing of employment evaluations, leaving these matters to the discretion of EPA. In the exercise of its discretion, however, EPA does routinely evaluate employment impacts when it conducts new rulemaking. Indeed, EPA264 conducted a robust employment analysis for this action, including a discussion of economic theory and employment, recent employment trends, and projected sectoral employment changes due to the Guidelines. See Chapter 6 of the RIA for both the proposed and final rules. EPA has conducte d similar assessments for other rulemakings and continues to evaluate employment impacts generally and to refine its employment

- analysis methods. Together, these efforts constitute “continuing evaluations of potential loss or shifts in employment” for the purposes of Section 321(a).

To the extent that the commenters is suggesting that Section 321(a) requires EPA to evaluate the cumulative employment impacts of all its rules, Section 321(a) contains no such requirement. Nevertheless, in EPA’s continuing eff ort to advance the evaluation of costs, benefits, and economic impacts associated with environmental regulation, EPA has formed a panel of experts as part of its Science Advisory Board SAB to advise the Agency on the technical merits and challenges of usin g economy

- wide economic models to evaluate the impacts of regulations. The panel of experts will consider a variety of issues related to the use of economy

- wide modeling, including their technical appropriateness for assessing employment impacts. Answers f rom the panel of experts will help EPA assess whether economy

- wide models can be used to evaluate employment and other economic impacts in the future.

5.h. Commenters take issue with the job

- estimation approach in the Clean Power Plan.

Commenters stated th at EPA has omitted the lost employment costs from retired coal and drastically underestimated the green energy investment needed to create 78,800 jobs by 2020. The commenters stated that if EPA's employment projections of 78,800 are true, the cost of insta lling zero carbon energy will cost the economy $30.7 billion in 2020, a figure never mentioned in the RIA. (1)

Commenters cited that the EPA estimates that employment could increase between 57,000 and 78,800 jobs, rely on a jobs multiplier with no basis in reality. The commenters stated that EPA concedes, "Employment impacts of demand

- side energy efficiency programs have not been extensively studied in the peer

- reviewed, published economic literature." The commenters cited the EPA's use of a multiplier of 2 .56 energy efficiency jobs per million dollars of spending, or $390,625 per job. The commenters stated that the earnings for the median worker are $30,454. The commenters stated that EPA's multiplier of $1 million in investment to create 2.56 jobs strains credibility, and compares it to the work of Richard Morgenstern, who found that $1 million in environmental spending translates into roughly 1.5 new jobs. The commenters stated that EPA also relies on models of green investment spending in states, which mu ltiplied by EPA's 2.56 jobs per $1 million in investment, yields roughly 78,800 jobs, meaning that the nation will spend more than $30.7 billion on energy efficiency investments by 2020. The commenters stated that this figure is not contained in EPA's RIA, but instead EPA claims from $8 billion to $12.3 billion "demand

- side" energy efficiency costs by 2020. The commenters stated that EPA underestimates demand

- side costs by threefold, and that a similar extrapolation for 2030 costs would approach $150 billio n. The commenters stated that EPA's multiplier is significantly higher than past estimates and $30 billion in energy efficiency spending by 2020 is three times what EPA reports.265 Response 5.h. : The EPA has analyzed employment impacts in the coal industry ( see chapter 6 of the RIA). The EPA fully recognizes that any displaced worker suffers costs, and, similarly, job search costs stop when newly hired workers start work. However, there is no agreement in the economics literature to date on whether we should, or how best to monetize employment impacts, both negative and positive. EPA has revised the demand

- side energy efficiency jobs multiplier from the proposal and now uses a range, rather than a single estimate. In addition, EPA has included other estimates of demand

- side energy efficiency jobs multipliers, from government sources. A bar chart and discussion within the RIA show EPA’s estimates in the context of these other multipliers.

5.i. Commenters cite results from specific reports issued by stakeholder g roups.
Commenters cited the following reports in expressing concern about the potential for high costs, high electricity prices, and large numbers of jobs lost. Commenters stated these reports make a variety of assumptions that do not match the proposed or final Clean Power Plan, and do not consider the benefits of the Clean Power Plan, including job creation. Below is discussion of some major highlights of each report.

5.i.1. US Chamber of Commerce / Institute for 21st Century Energy report:

Commenters cit ed the U.S. Chamber of Commerce's findings that the EPA's rules would result in 225,000 jobs lost and an annual loss of $50 billion to the gross domestic product. The commenters stated that electric industry analysts suggest increases of 10

- 15 mills/kWh at current gas prices and the impact could escalate significantly if gas prices increase more than projected.

Commenters cited a US Chamber of Commerce calculation of economy

- wide job losses of 224,000 per year through 2030.

Commenters cited an Institute f or 21st Century Energy projection of an annual average of approximately 225,000 fewer jobs under the Proposed Rule. The commenters stated that in 2022, the loss would be more than 440,000 jobs.

Commenters cited the United Mine Workers of America predictio n that there will be 75,000 direct coal generation jobs lost by 2020 and 152,000 by 2030. The commenters cited the International Brotherhood of Electrical Workers that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries, and that high

- skill, middle

- class jobs would be lost, falling heavily in rural communities that have few comparable employment opportunities. The commenters cited the U S Chamber of Commerce projections that there will be 224,000 jobs lost on average each year through 2030, and the rule will result in a loss of $50 billion in GDP on average. The commenters cited Dr. Gabriel Calzada Alvarez, who examined the impact of

rene wable energy policies in Spain, found that 2.2 jobs were lost for every one job created.

Commenters stated that the CPP would have the effect of significantly reducing power generation from coal

- fired EGUs, which would immediately threaten the supply of p ower available for distribution to consumers and force the retirement of hundreds of power plants. The commenters stated that hundreds of thousands of coal miners and supporting employees would face layoffs due to the decrease in coal demand. The commenter s stated that due to the266 significance and size of the coal industry, enactment of the CPP would push the national economy along a similar trajectory as the coal industry itself. The commenters stated that by 2030, some 114 GW of existing capacity will be r emoved from the grid due to closures of coal

fired EGUs

. The commenters stated that the Plan is projected to result in a peak loss of 442,000 jobs occurring in 2022, amounting to a decline of nearly $104 billion to the US GDP

. The commenters stated that mo st analysts predict that the cost of electricity will increase significantly, amounting to an aggregate increase of nearly $300 billion by 2030. The commenters stated that in cases of power shortages, which are a distinct possibility due to increased relia nce on redispatch to NGCC, price spikes in excess of 10 times the average rate are likely

. The commenters stated that costs are particularly significant for lower

- income households, which the CPP is expected to disproportionately impact

.
Commenters stated that by drastically increasing the cost of energy, the proposed rule will inhibit economic development and hamper growth at a time when many communities continue to feel the negative effects of a prolonged economic downturn. The commenters cited a recent I HS study for the U.S. Chamber of Commerce predicting that proposed EPA CO2 rules will cause the loss of 224,000 jobs annually, increase electricity costs by $289 billion, and lower household incomes by over $500 billion

. The commenters stated that the Miss issippi Energy Institute projects that the minimum incremental capital cost for Mississippi to comply with the proposed rule will be $14.2 billion, which will primarily consist of constructing generating facilities not likely to be built unless compelled b y federal mandate. The commenters stated that the rule will almost certainly cause the premature closure of existing coal plants in Mississippi, which will reduce energy diversity, security, and reliability, and will place upward pressure on electricity
pr ices.

Response 5.i. 1. : The Chamber of Commerce report was issued before the Clean Power Plan was proposed. The Chamber reports costs that far exceed the Clean Power Plan’s projected costs; job losses that dwarf those estimated in the Clean Power Plan; and zero benefits or job gains.

The report’s starting point is a set of policies resulting in a 42 percent drop in carbon dioxide emissions, which is significantly more stringent than the 30 percent reduction expected from the proposed Clean Power Plan. The resulting higher costs are further inflated by assuming that new natural gas

- fired power plants would be required to apply carbon capture and storage (CCS), which is not the basis of BSER. On the other hand, no job gains are assigned to construction or
op eration of those plants.

In general, spending on compliance is incorrectly assumed to be an unproductive use of capital, precipitating a loss in GDP, an effect for which real world evidence has never been produced. This “GDP loss” is then tied to predicti on of significant job losses.

The report also understates the likely implementation of energy efficiency measures. Its results include electricity demand growth (1.2%/year) that significantly exceeds the projections in the EIA 2014 Reference Case used by EPA (0.9%/year). The Chamber also assigns $50 billion of cost to energy efficiency implementation, while at the same time assuming no jobs will be created to implement those efficiency measures. It also assumes that states will only meet 50 percent of the ir own state

- level Energy Efficiency Resource standards, thereby assigning additional implementation cost (but no jobs) to the CPP.267 5.i.2. NERA/NMA/ACCCE report:

Commenters stated that Federal regulations have already forced two plants in his district to c lose over the last two years. The commenters cited a National Mining Association projection that more than 300 plants would retire nation

- wide due to EPA rules over the next six years. The commenters cited a Heritage Foundation study predicting that the EP A's anti

- coal policies could terminate 600,000 American jobs by 2023 while causing economic growth to drop by more than $2 trillion.

Commenters stated that the GHG ESPS will reduce demand for Indiana coal and result in losses of good paying jobs in rural communities. The commenters stated that manufacturing and agriculture are significant users of electricity in Indiana and will suffer significant losses if the proposed GHG ESPS is promulgated. The commenters stated that manufacturing and agriculture in I ndiana are dependent on the low cost of electricity. The commenters stated that state's utility rate forecasting experts have predicted electrical rates in Indiana will rise by more than 30% over the next decade

- prior to considering the impacts of the GHG ESPS. The commenters cited NERA projections that rates will be 12% more costly each year compared to EPA's projections. The commenters cited an Energy Ventures Analysis prediction that electric rates for industrial customers will increase by 50% by 2020, and natural gas costs in Indiana will increase by 108%.

Commenters stated that the proposed rule would force Mississippi utilities to generate more electricity from natural gas, even ahead of lower

- cost options. The commenters stated that increasing custo mers' exposure to volatile natural gas prices is bad for business and business owners, as well as individual ratepayers. The commenters cited the American Coalition for Clean Coal Electricity that the adoption of these regulations will lead to an increase of electricity rates of 14

- 19 percent in Mississippi and would place 3,400 direct and indirect coal jobs in jeopardy of being eliminated.

Commenters stated that the cost estimates fail to reflect or capture the subsequent adverse spillover impacts of high er electricity rates on our nation's overall economic activity. The commenters cited an analysis by NERA Economic Consulting indicating that average U.S. electricity prices would increase by 12% per year and the total costs of the rule could be between $36 6 billion and $479 billion over a 15

- year timeframe

. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy consumers. The commenters stated that higher energy prices disproportionately harm low

- income and middle

- income families. The commenters stated that the Proposed Rule would result in a direct loss of 52,000 jobs in the electric utility, mining and rail sectors due to plant closures. The commenters stated that an additional 100,000 indir ect jobs are at risk for loss in communities affected by the closures, and that job losses would be concentrated in, "relatively poor, rural areas that are least able to afford the loss of high

- wage skilled jobs."

Response 5.i.2. : National Economic Research Associates (NERA) Economic Consulting issued its report after proposal of the CPP. NERA reports costs that far exceed the Clean Power Plan’s projected costs, sharp electricity prices increases inconsistent with EPA’s projections, and zero benefits . NERA does not report estimates for jobs gained or lost; its model assumes full employment across the economy. However, appendix A to the report suggests a method that could be used to derive “job

- equivalents” from the model’s output.268 The NERA report show results from several different implementation cases. The highest costs come from a case wherein NERA assumes that building block 3 and 4 (renewable energy and energy efficiency) are not available due to legal challenges. These costs are frequently cited b y commenters.

NERA derives its relatively high cost estimates by changing some key assumptions. For building block 1, instead of the 6 percent heat rate improvement for coal

- fired plants that represent BSER in the proposed Clean Power Plan, NERA assumes a maximum improvement of 1.5 percent is possible, with other groups of units achieving either 1 percent improvement or no improvement.

For proposed building block 3 (renewable energy), NERA does not report the cost assumptions in its model.

For proposed buil ding block 4 (demand

- side energy efficiency), NERA uses a range of efficiency improvement costs significantly higher than the Clean Power Plan. Where the CPP uses a range of $550

- 770 dollars/MW

- hour, NERA uses a range of 896

- 1,253 dollars/MW

- hour.

The comb ination of all of these choices made by NERA is overestimated negative impacts.

5.i.3. Energy Ventures Analysis report:

Commenters stated that the GHG ESPS will reduce demand for Indiana coal and result in losses of good paying jobs in rural communities. The commenters stated that manufacturing and agriculture are significant users of electricity in Indiana and will suffer significant losses if the proposed GHG ESPS is promulgated. The commenters stated that manufacturing and agriculture in Indiana are dep endent on the low cost of electricity. The commenters stated that state's utility rate forecasting experts have predicted electrical rates in Indiana will rise by more than 30% over the next decade

- prior to considering the impacts of the GHG ESPS. The com menters cited NERA projections that rates will be 12% more costly each year compared to EPA's projections. The commenters cited an Energy Ventures Analysis prediction that electric rates for industrial customers will increase by 50% by 2020, and natural g as costs in Indiana will increase by 108%.

Commenters stated that compliance with the proposed rule will significantly increase the cost of producing manufactured goods in the US, make US manufacturers less competitive with foreign manufacturers, and resu lt in loss of American jobs. The commenters cited Energy Ventures Analysis findings of many flaws in EPA's underlying assumptions about power plant process efficiency improvements, non

- hydro renewable energy expansion and rapid growth in consumer energy ef ficiency that were used to calculate state emission rate limitations. The commenters stated that EVA also found that EPA's assumptions are contrary to power industry practices and outside projections by the U.S Department of Energy (DOE) and other independ ent forecasts.

Response 5.i.3. : The Energy Ventures Analysis (EVA) study reports costs that exceed the Clean Power Plan’s projected costs, sharp electricity prices increases inconsistent with EPA’s projections, and zero benefits. EVA makes several analyti c decisions that differ sharply from EPA’s. First, EVA assumes that there will be no heat rate improvements possible at coal

- fired EGUs (building block 1).269 EVA also relies on its own internally

- derived forecast of state renewable power development, and appears to assume that some states will not meet their own state

- level renewable portfolio standards (building block 3). In reality, most states with renewable portfolio standards are on track to meet them or have already met them. 5

For energy efficiency ( proposed building block 4), EVA’s energy efficiency results represent minimal improvement over EPA’s 2013 baseline (AEO 2013); therefore they report far less energy efficiency savings than EPA has estimated is achievable.

5.i.4. Heritage Foundation report:

Commenters stated that Federal regulations have already forced two plants in his district to close over the last two years. The commenters cited a National Mining Association projection that more than 300 plants would retire nation

- wide due to EPA rules o ver the next six years. The commenters cited a Heritage Foundation study predicting that the EPA's anti

- coal policies could terminate 600,000 American jobs by 2023 while causing economic growth to drop by more than $2 trillion.

Commenters cited a study by the Heritage Foundation that EPA's energy regulations would cost hundreds of thousands of jobs and cause a significant decline in personal income while having a minimal impact on global warming. The commenters stated that these regulations would reduce
ag gregate gross domestic product by more than $2.5 trillion between now and 2030, and employment would track nearly 300,000 jobs below the no

- carbon

- regulation baseline in an average year, with some years seeing an employment deficit of more than 1 million j obs. The commenters cited a NERA study estimating that the costs to comply with EPA's proposed plan could total $366 billion, or more and finds that 43 states will have double

- digit electricity price increases.

Commenters stated that Americans will be hi t repeatedly with higher prices as businesses pass higher costs onto consumers. The commenters stated that if a company had to absorb the costs, high energy costs would shrink profit margins and prevent businesses from investing and expanding. The commente rs stated that cutbacks result in less output, fewer new jobs, and less income. The commenters stated that the impact of a revenue

- neutral carbon tax starting at $37 per ton in 2015 through 2030 would be substantial, including an average employment shortfa ll of nearly 300,000 jobs; a peak employment shortfall of more than 1 million jobs; 500,000 jobs lost in manufacturing; an aggregate GDP loss of more than $2.5 trillion (inflation

- adjusted); and a total income loss of more than $7,000 per person (inflation

- adjusted). The commenters stated that the Energy Information Administration (EIA) has analyzed the economic impact of a $25/ton carbon tax using essentially the same model and found more than $2 trillion in lost GDP from 2014 to 2030 and a peak employment differential of 1 million lost jobs.

5 “Renewables Portfolio Standards in the United States: A Status Update”, Galen Barbose, Lawren ce Berkeley National Laboratory, Presentation given at Renewable Energy Markets 2014, December, 2014.270 Response 5.i.4. : The Heritage Foundation report was issued after the Clean Power Plan was proposed, but it does not analyze the proposed CPP. Instead it posits a national carbon tax. Heritage also reports job losses that dwarf those estimated in the Clean Power Plan; and z ero benefits or job gains.

The Heritage Foundation uses its own proprietary “input

- out” model, the Heritage Energy Model (HEM) which is explained to be a derivative of EIA’s National energy Model System (NEMS). As noted in NEMS documentation, the model li nk between the energy sector and the rest of the economy requires a large number of modeling assumptions and choices. These modeling choices are important for understanding their results, but were not reported in the Heritage study.

This modeling approach generally considers how higher production costs impact employment, but does not include the ability for firms to do things they would do in the real world, such as substitute materials used in the manufacturing process or innovate and create new, cleaner
p roduction processes. Therefore, it is likely to overstate job loss in the regulated sector.

In addition, the Heritage report only focused on the manufacturing sector and did not account for sectors that may have positive employment impacts associated with implementation of the CPP. EPA’s employment analysis for the proposed Clean Power Plan included, in addition to the power sector and upstream industries such as coal and natural gas extraction, job gains resulting from new economic activity due to heat ra te improvements, renewable energy and demand

- side energy efficiency activities.

5.i.5. UMWA/IBEW report:

Commenters cited the United Mine Workers of America prediction that there will be 75,000 direct coal generation jobs lost by 2020 and 152,000 by 2030. The commenters cited the International Brotherhood of Electrical Workers that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries, and that high

- skill, middle

- class jobs would be lost, falling heavily in rural communities that have few comparable employment opportunities. The commenters cited the US Chamber of Commerce projections that there will be 224,000 jobs lost on average each year through 2030, and the rule will result in a loss of $50 billion in GDP on average. The commenters cited Dr. Gabriel Calzada Alvarez, who examined the impact of renewable energy policies in Spain, found that 2.2 jobs were lost for every one job created.

C ommenters stated that EPA's carbon regulations could cause serious harm to the U.S. economy, raising energy prices, and costing jobs. The commenters cited United Mine Workers of America estimates that the rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020, and cumulative wage and benefit losses from these sectors of $208 billion between 2015 and 2035. The commenters stated that higher energy prices disproportionately harm low

- income and middle

- income families. The commenters cited a Center for Strategic and International Studies (CSIS) analysis that the proposal could result in nationwide costs of up to $32 billion per year; and average electricity rate increases of up to 9.9 percent per year. The com menters cited the Wall Street Journal that the rule is a huge indirect tax and wealth redistribution scheme and that costs will ultimately flow to consumers and271 businesses. 23244 (9). Commenters cited an analysis by Eugene Trisko, counsel to the United Min e Workers of America that the CPP would destroy 187,000 direct and indirect jobs.

Commenters stated that the CPP rule will lead to the closure of coal

- burning power plants throughout the United States, resulting in the loss of more than 52,000 jobs in the coal, utility and railroad industries by 2020, and further direct job losses in those industries will reach 65,000 by 2030 as a result of this rule.

Commenters stated that the drastic reduction in coal generation will cost 52,000 direct and 100,000 indir ect jobs. The commenters stated that MATS and the CPP will close 40% of the coal generation that exists today, and eliminate 400,000 or more irreplaceable American jobs. The commenters stated that under the CPP Colorado will not receive credit for plant cl osures already made and will be forced to close at least three additional coal

- fired plants. The commenters stated that in at least 22 other states the impact of the CPP will not be limited to the coal sector.

Commenters stated that these job losses will have a ripple effect in the communities throughout the coalfields and beyond, where more than 208,000 jobs will be lost by 2030.

Commenters stated that EPA estimates do not capture the subsequent spillover impacts of higher electricity rates on overall e conomic activity. The commenters stated that these increases will place an immense burden on U.S. businesses, and could eliminate the critical competitive advantage that affordable and reliable electricity provides to the American economy. The
commenters s tated that the United Mine Workers Association has estimated that the rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020, and cumulative wage and benefit losses from these sectors of $208 billion be tween 2015 and 2035.

Commenters stated that manufacturers and others who use natural gas for purposes other than electric generation will also see projected cost increases up to $50 billion. The commenters stated that 187,000 direct and indirect job will be lost in the utility, rail, and coal industries alone by 2020 and these sectors will lose cumulative wages and benefits of $208 billion by 2035. The commenters stated that by forcing the retirement of a significant portion of the state's electric generat ion capacity, the rule puts at risk the reliability of Texas' electric grid, the failure of which can have extremely dramatic financial impacts, as well as public health and safety impacts.

Response 5.i.5. : Summary materials on the UMWA analysis were avai lable to the EPA, but the full report was not, and does not seem to be available publicly. From the summary materials, the UMWA analysis appears to attribute all changes in the use of coal for electricity generation from 2009 until 2030 entirely to the MAT S and CPP rules, ignoring the significant drop in natural gas prices from 2009 to 2013, and fact that demand for electricity has been almost flat since 2009 (EIA, AEO 2013 and AEO 2014).

In addition, the UMWA materials cite job losses due to the changes i n electricity generation, and appear to calculate future job losses by multiplying job

- years 6 by the number of jobs in each year, a practice that inflates the job loss numbers. UMWA also does not discount the dollars

6 A job

- year refers to the amount of work done by the equivalent of one person in one year.272 underlying the job

- years calculations o ver time, which also artificially inflates job losses. Additionally, it does not address benefits. Finally, it does not appear to address job gains such as employment related to natural gas, renewable energy, or energy efficiency (such as employment weathe rizing buildings, conducting building energy audits, constructing and installing renewable energy, programming building energy management systems, etc.)

.

5.j. Commenters state that the clean power industry protects and creates jobs.

Commenters stated tha t the proposed rule will create jobs. Commenters supported the Clean Power Plan and stated that it will save jobs, help protect farming, fishing, forestry and other rural resources undeniably impacted by carbon pollution, and reduce the job

- killing impacts of carbon pollution. The commenters further stated that the solar energy employs roughly twice as many people as the coal mining industry, and added that other renewable resources also add jobs.

Commenters also supported the Clean Power Plan because it p rovides an opportunity for more research, manufacturing and construction jobs, more efficient and less costly energy, cleaner air, improved health outcomes and more.

Commenters stated that energy efficiency will help the economy through job creation and

r educed energy expenditures, and cited a study by Southface which found that over 4,100 Georgians were employed full

- time in the energy

- efficiency and building sciences sector in 2013.

Similarly, commenters stated that even in coal's brightest day in Georg ia when it was producing about 70 percent of electricity, it only accounted for 2,700 jobs in Georgia whereas in 2012, there are already 10,000 jobs in the solar, wind, and energy efficiency industries.

Commenters stated that the potential positive impacts of capping carbon pollution in Colorado could add $622 million to the economy and create over 9,000 jobs.

Commenters stated that there are significant benefits in addition to GHG emission reductions that can be achieved with energy efficiency programs an d that energy efficiency programs can be deployed at a level consistent with EPA's assumed levels for the fourth building block. The commenters stated that in Rhode Island, 544.73 full

- time equivalent (FTE) employees had work in 2013 as a result of its inv estments in energy efficiency programs to electricity and natural gas customers, and since most of those jobs were tied to installations at customer homes or businesses, the jobs were grown locally.

Commenters stated that Minnesota is on a clean energy pa th that is generally consistent with EPA's plan, and clean energy efforts in Minnesota have already resulted in some 15,000 jobs accounting for over $1 billion in annual wages. The commenters stated that EPA should work with states to help provide clean en ergy training opportunities where appropriate.

Commenters stated that compliance with the Clean Power Plan will generate additional jobs and spur business growth in North Carolina. The commenters cited an analysis prepared by ICF International, Inc. for t he Natural Resources Defense Council, the Clean Power Plan can create273 approximately 6,700 jobs in North Carolina. The commenters stated that there are now more Americans working in the solar industry than are currently working as coal miners.

Commenters s tated that based on an expanded analysis of the proposed rule which included several indirect effects not included in the EPA analysis it estimates a net gain of 134,000 jobs in 2020, and projects that these employment gains will increase to 263,000 by 204 0.

Commenters stated that the RIA does not capture various indirect employment impacts and provided an economy

- wide assessment of the rule's impact on employment that captured the employment impacts of the rule not only for directly affected industries (s imilar to EPA) but also for industries that may be indirectly affected by the rule. The commenters estimated that the GDP and employment effects of the rule are small but positive. The commenters stated that by 2025, total employment would increase by more than 200,000 and increase by 263,000 by 2040. The commenters stated that the increases in electricity efficiency brought about by the rule represent increases in multi

- factor productivity, which stimulates the economy by raising its potential supply (how much output can be produced with given resources). The commenters stated that the efficiency investments are a cost to some industries and consumers, but represent increased demand for the industries producing the goods and services necessary to accomplish those investments. The commenters stated that reductions in electricity demand have negative impacts on employment and investment in the electric power industry, as well as on output and jobs in the coal and gas producing industries. The commenters estim ated that carbon emissions would fall to 5104 million tons by 2040 under the proposed rule, compared with 5710 million tons in the reference case, with most of the reduction is in the electric power sector.

Commenters stated that three years after Missouri's Renewable Energy Standard was enacted, there were over 68,000 clean energy related jobs in the state

. The commenters stated that the solar industry alone in Missouri supports 3,700 jobs statewide

. The commenters stated that with the added influe nce of the EPA's Clean Power Plan this number is sure to grow and have a positive impact on Missouri. The commenters stated that raising Missouri's goal of 21% by 2030 and including strong standards for enforcement will only help grow Missouri's economy an d keep our workforce employed. The commenters stated that lowering the rate of unemployment in Missouri will increase the tax base and reduce the number of people filing unemployment claims, creating an insurgence of funds for schools, parks, libraries, ro ads, and other necessary areas of public spending in the state. The commenters stated that Missouri will benefit greatly from reducing its reliance on out

- of

- state coal. The commenters stated that Missouri spends $1.6 billion importing coal from surroundin g states and does not mine any of its own fuels. The commenters stated that the Farmers City Wind Power Project in Atchison County is a 146 megawatt wind farm that created 150 jobs during construction, generated up to $1 million in local tax revenue, and p ays $365,000 annually to the landowners who leased their property to the wind developer

. The commenters stated that in Holt County, Missouri, another $400 million project is expected to come online in 2015, creating another 300 jobs in rural Missouri and l essening our reliance on imported coal

. Commenters stated that the cost of doing nothing is far greater than that of the CPP, exceeding the capacity of local communities and our economy. The commenters stated that the expansion of energy efficiency and ren ewable energy generation will spur economic growth and create jobs in installation and maintenance which cannot be outsourced abroad.274 Commenters stated that the Clean Power Plan rule will boost bottom lines and help create jobs as states look to comply wi th the standards and achieve reductions through various measures. The commenters supported the compliance flexibility inherent in the rule. The commenters cited an American Council for an Energy Efficient Economy (ACEEE) report finding that energy efficien cy investments alone could increase national gross domestic product by $17.2 billion in 2030, and produce a net gain of about 611,000 jobs, with all 50 states seeing net job creation, all at no net cost. The commenters stated that a review of the Northeast 's Regional Greenhouse Gas Initiative (RGGI) program by the Analysis Group found that over the first three years, the program created more than 16,000 additional jobs with each of the 10 states showing net job additions. The commenters stated that 56 perce nt of small business owners still support EPA's regulations even if it would cause utility rates to rise. The commenters stated that small businesses are strategically positioned to help states achieve their carbon reduction goals, igniting job creation op portunities and cost savings along the way. The commenters stated that business opportunities exist with respect to modernizing inefficient power plants and buildings as well as operation new, cleaner and more efficient power plants; conducting energy audi ts and retrofitting residential as well as commercial buildings to be more energy efficient; and developing new and innovative technologies throughout the supply chain. The commenters stated that ACEEE conducted an analysis and found that by 2030 the rule could induce over $625 billion of investment in various energy efficiency industries and behaviors, and create an average of over 400,000 jobs per year both directly and throughout the economy. The commenters cited an Analysis Group report that while the R egional Greenhouse Gas Initiative (RGGI) program costs initially increased electricity rates, the impact of energy efficiency investments (using RGGI allowance revenues) significantly reduced commercial and residential electricity use, placing downward pre ssure on rates over time, and combined with lower consumption, tended to generate on average much lower electricity bills.

Commenters stated that the exponential growth of renewable energy is both a cause and a product of rapidly falling costs. The commen ters stated that as the renewable energy market has increased in scale, costs have come down. The commenters stated that wind and solar costs have come down at a much faster rate than conventional sources and as the renewable energy market continues to inc rease in scale, even more cost reduction is a confident expectation. The commenters stated that the wind

- power industry employs over 80,000 workers in the U.S., a number that can double with the right policies. The commenters stated that the U.S. solar ind ustry employed 142,698 Americans as of November 2013, a 19.9% growth in employment since September 2012

. The commenters stated that the geothermal industry supports over 20,147 jobs

. The commenters stated that America's biomass and waste

- to

- energy industri es provide 25,000 jobs nationwide

. The commenters stated that energy storage systems (ESS) technologies are key to addressing the variability of renewable resources not managed by intelligent systems by allowing power to be stored and then deployed as need ed, thereby foregoing the need for fossil

- fuel powered back

- up generation facilities, and ESS could also provide critical backup power to the grid in times of peak usage or outages without the need for fossil

- fired backups. The commenters stated that the D epartment of Energy has set a conservative estimate of 5 GW of new storage by 2022 and expects the ESS industry to grow by several billion dollars. The commenters stated that others have found that the potential for 47 GW (including 25 GW of battery storag e) of ESS by 2030

.275 Commenters stated that the U.S. has an estimated 3.4 million clean jobs as of 2013

- a number which is steadily growing. The commenters stated that in the last two years it has tracked nearly 600 clean energy and clean transportation pro ject announcements that could create more than 210,000 jobs when completed. The commenters stated that over the last four years, wind generation has doubled and solar capacity has grown by a factor of five, and both have reduced costs by close to 40 percen t. The commenters stated that the Clean Power Plan will accelerate this growth if designed to maximize private and public investment. The commenters stated that since 2008, the states participating in RGGI gained more than $1.6 billion in economic value,

c onsumers saved $1.1 billion on electric bills, and over 16,000 jobs were created

.
Commenters stated that Louisville is the number one urban heat island in the nation. The commenters stated that dependency on a coal

- based energy economy have made Kentuckia ns exceptionally vulnerable and coal mining in Kentucky has collapsed, with a loss of 40% of the state's coal mining jobs since 2011. The commenters stated that new jobs in energy efficiency and renewables could create significant employment opportunities for the state. The commenters cited a study conducted by the Mountain Association for Community Economic Development (MACED) found that the Clean Energy Opportunity Act, a proposed state legislation, would require investments in renewable energy and energy efficiency and would result in over 28,000 jobs over the course of its ten

- year implementation period. The commenters stated that the EPA targets are modest and that there are alternatives that can result in much deeper carbon cuts. The commenters stated that EPA needs to promulgate the strong regulations to start addressing the reality of climate change in Kentucky.

Commenters stated that replacing coal with clean energy resources will help spur job creation across Montana. The commenters stated that cle an energy sectors could create nearly 4,000 additional good paying jobs over the next 20 years if Montana develops its wind, solar, and energy efficiency potential. The commenters stated that unlike centralized coal plants, where jobs are limited to just o ne location, energy efficiency, rooftop solar, and backyard wind systems can provide jobs in every single community and rural area in Montana. The commenters stated that renewable energy projects in Montana have already created over 1,000 jobs and 300
perm anent jobs across the state. The commenters stated that the wind industry employs 80,000 people across the United States, and the solar industry directly employs over 140,000 people, compared to about 130,000 people employed nationally at coal mines and co al

- fired power plants. The commenters stated that on average, solar and wind generation employ a little over twice as many people per megawatt as coal generation.

Commenters stated that China is investing heavily in advanced coal technologies, and failure to keep up would put America at a competitive disadvantage. The commenters stated that carbon capture and sequestration (CCS) can protect coal jobs in West Virginia and create a whole new opportunity for American job growth, developing and perfecting CCS technology to meet global demand.

Commenters stated that nuclear plant construction can be viewed as SCE&G's plan for reducing carbon emissions by reducing the need for new coal plants and enabling older coal plants to be retired. The commenters stated t hat the cost to consumers for this private utility effort to "reduce carbon emissions" has been an increase in rates of 11.82 percent since 2009, and additional rate increases are expected. The commenters stated that South Carolina consumers, residential and276 commercial, have seen a 37 percent hike in electricity rates in the last 5 years. The commenters stated that South Carolina has the fastest growing economy on the East Coast and the lowest unemployment rate in six years. The commenters stated that hea vy investments in alternative energy can be done without hurting the economy, even when electricity rates increase dramatically, and that high

- paying construction jobs created by investing in nuclear energy have helped South Carolina's economy. The commen ters stated that these investments in alternative energy will protect us from the future negative effects of climate change that are guaranteed to hurt our economy and cost jobs.

Commenters stated that solar power systems are expected to generate more tha n 20,000 GWh in 2014, and in the Southeast alone, there is nearly one gigawatt of solar capacity currently operating. The commenters stated One GWh of solar generation eliminates 690 metric tons of CO2 emissions; across the nation, solar generation is expe cted to avoid 13.8 million metric tons of CO2 emissions in 2014. The commenters stated that solar technologies consume no fuel, thereby shielding customers from the fuel price volatility risks associated with fossil fuel generation. The commenters stated that solar photovoltaic consumes no water, and solar energy provides substantial air and water quality benefits. The commenters stated that the 515 MW of new utility scale solar for which Georgia Power Company is currently seeking PSC approval were offered at an average price of less than 6.5 cents per kWh, well below utility's avoided costs

- providing, in the utility's words, "overwhelming benefit" to customers in the form of cost savings. The commenters stated that solar power investments create jobs and increase economic investment. The commenters stated that there are nearly 143,000 Americans working in the solar industry, a 20 percent increase since 2012 and that there are now more Americans working in the solar industry than mining coal.

Commenters s tated that investment in renewable energy and energy efficiency will drive job creation. Increased renewable energy generation and energy efficiency investments will lower utility bills for households and businesses, who will then spend the savings on othe r goods and services, stimulating the economy. Commenters stated that energy efficiency investments can reduce carbon pollution while also lowering utility bills, creating jobs, and stimulating the economy. The commenters stated that states with strong energy efficiency programs are already experiencing this effect.

Response 5.j. : The EPA acknowledges the job growth opportunities discussed by the
commenters. Chapter 6 of the RIA provides information on job growth that may occur in the
energ y efficiency sectors as a result of the CPP. The Clean Power Plan encourages individual states to tailor their energy choices to suit their individual needs and circumstances, as long as goals are met. The EPA agrees that renewable energy will be an increa singly important building block in constructing our low carbon future.

5.k. Commenters stated that reduction in GHG emissions led to increased employment.

Commenters stated that from 2006 to 2011, greenhouse gas emissions citywide fell 12% while populat ion and workforce each grew by 6%. The commenters stated that it is important a significant share of those GHG reductions can be attributed to the shift to less carbon intensive electricity generation throughout the region.277 Commenters stated that replaci ng coal with clean energy will help spur job creation across Montana. According to the commenters, the coal industry directly employs about 1,700 people in the state. The commenters stated that transitioning these jobs to the energy efficiency and renewabl e energy sectors could create nearly 4,000 additional good

- paying jobs over the next 20 years if Montana develops its wind, solar, and energy efficiency potential as well as provide jobs that are geographically dispersed across Montana. The commenters st ated that unlike centralized coal plants, where jobs are limited to just one location, energy efficiency, rooftop solar, and backyard wind systems can provide jobs in every single community and rural area in Montana. The commenters stated that renewable en ergy projects in Montana have already created over 1,000 jobs and 300 permanent jobs across the state. The commenters stated that energy efficiency sector jobs are broadly defined as anyone employed by a business that puts in new energy efficient windows, lighting, or adding insulation to a home or business works in the energy efficiency sector. The commenters stated that while exact energy efficiency employment numbers are difficult to obtain, this sector easily employs at least several hundred people acro ss Montana.

Commenters stated that jobs created by renewable energy resources nationally reflect the significant job creation potential of renewable energy compared to coal

- fired power with the wind industry employing 80,000 and the solar industry employi ng over 140,000 people, a total of over 200,000 people compared to about 130,000 people employed nationally at coal mines and coal

- fired power plants. The commenters stated that this impressive considering that solar and wind makes up about 8 percent of th e electricity generation in the U.S (75 gigawatts), compared with the 40 percent currently generated by coal (310 gigawatts); on average, solar and wind generation employ a little over twice as many people per megawatt as coal generation. The
commenters st ated that if carbon emissions from coal are reduced and renewable energy potential developed, the state will reap significant economic, job, public health, and climate benefits.

Commenters stated that, for economic reasons, insulation jobs are almost compl etely domestic; from the raw materials, to the manufacturing process, to the installation, every job associated with the product is provided by U.S. labor. The commenters stated that manufacturing jobs are well

- paying jobs. The commenters stated that the U nited States has lost over two million manufacturing jobs since 2004; construction jobs are also down although the numbers are slowly rebounding, thanks to a better housing market. The commenters stated that EPA has the opportunity to incentivize states to enhance and increase their existing programs that support energy efficiency and in particular insulation and the jobs associated with it. The commenters stated that they believe that if states are given maximum flexibility to incentivize and credit
energy efficiency improvements, it will lead to job growth as energy efficiency is simply the most cost effective way to reduce energy production from existing power plants and insulation is the most cost effective to gain energy efficiency.

Commenters stated th at over the past few years, the coal mining in Kentucky has collapsed, with a loss of 40 percent of the state's coal mining jobs since 2011, and now coal

- related jobs are less than 1 percent of statewide employment, with out

- of

- state companies primarily dr iving the mining of coal. The commenters stated that the state has been taking the position that the plan must slow down so that coal jobs are protected, but the jobs are already gone and a delay in diversifying our energy resources will only delay new opp ortunities for job creation. The278 commenters cited a study conducted by the Mountain Association for Community Economic Development (MACED) which found that the Clean Energy Opportunity Act, a proposed state legislation that involves energy efficiency and r enewable incentives, would require investments in renewable energy and energy efficiency and would result in over 28,000 jobs over the course of its ten

- year implementation period. The commenters stated that this is just one consideration that challenges t he comments submitted by Kentucky's Energy and Environment Cabinet that contend the Clean Power Plan will result in a net loss of jobs if we diversify and modernize our energy sector.

Response 5.k. : The EPA agrees that investment in energy efficiency and renewable energy has created and will continue to create a significant number of jobs. Our analysis in the Regulatory Impact Assessment (RIA) for this rule estimates the potential employment benefits of the CPP. We also agree that most of the jobs installi ng and operating renewable energy, and making energy efficiency improvements to buildings, are by definition American jobs. Employment in energy efficiency and renewable energy includes employment in construction and installation, some of which is short

- te rm, and employment in operating existing power systems, most of which is long

- term. (See chapter 6 of the RIA for this rule.)

5.l. Commenters stated that limiting climate change will protect jobs related to outdoor recreation.

Commenters stated concern ove r impacts of climate change on avian species. The commenters stated that America's 46 million birdwatchers spend roughly 32 billion dollars every year, generating 85 billion dollars in overall economic output, and 13 billion dollars in tax revenues. The co mmenters stated that bird

- watching, hunting and other outdoor activities enjoyed by more than 80 million Americans support over 2.6 million jobs, and these jobs are at risk if EPA does not effectively control carbon emissions.

Commenters states that their family members work in the winter ski industry in Lake Tahoe and their jobs may disappear due to diminished snowfall patterns.

Response 5.l. : The EPA agrees that jobs related to outdoor recreation are an important part of the economy, and that climate cha nge poses risks to wildlife habitat. In addition, many of these jobs are not located in major population centers, but in rural areas with fewer employment options

-- near national parks, forests, and other class I areas, as well as near state parks and

out door recreation areas.

5.m. Commenters stated that there will be a need for worker assistance and retraining and that new jobs created need to be good jobs

Commenters stated that union laborers are participating in the conversions of coal plants to natural gas, they are building the pipeline infrastructure to meet the needs of the growing natural gas demand, they are building three of the five nuclear reactor units under construction, and they are building wind farms and solar fields at unprecedented scale. The commenters stated that the loss of outage work in coal

- intensive areas creates a disproportionate burden on the working families of these communities. The commenters stated that the City of Miamisburg stands to lose 7.4% of its property tax base with the closing of the O.H. Hutchings Power Station and the279 closing of AEP's Muskingum River Power Plant will cost each of the Frye and Wolf Creek School Districts 10% of their operation funds. The commenters stated that the proposed rule would place an additi onal 1,675 operations workers (150

- 200 FTE Laborers alone) and hundreds more Laborer outage workers at risk at the nine remaining Ohio coal plants subject to regulation. The commenters stated that EPA in their guidance to states should recognize the need t o require provisions for displaced workers, that these policies are designed to maximize construction job creation (preferably in the energy sector) and assist workers in transitioning to them, and that all new programs created in pursuit of demand side or energy efficiency construction require responsible standards to guarantee that as new sectors emerge they provide family

- sustaining jobs. The commenters stated that one avenue for providing policy solutions for displaced workers would be for EPA to requir e components in the state planning process such as an economic impact report relevant to the power sector.

Commenters stated that thousands of Montanans are employed in high

- paying jobs related to extraction, use, and distribution of coal and these jobs s upport families as well as communities. The commenters stated that it is critical that any plan be designed to protect and maintain these jobs while meeting the new environmental standards. The commenters stated that they do not believe that jobs and the e nvironment are automatically contrary to one another and they strongly support having the choice on how to meet the proposed rule. The commenters stated that it is important to find the right combination of "inside

- the

- fence" measures

- like heat

- rate impr ovement and installing new technologies, like carbon sequestration

- and "outside

- the

- fence"

measures

- like deploying more renewable energy and improving energy grid efficiency. The commenters stated that the rule must create more economic opportunity for Montana's working families and ensure that news jobs are jobs of good quality. The commenters stated that this rule could bolster emerging sectors of the economy and re

- establish manufacturing centers in the United States dedicated to supplying the needs of an expanded energy economy. The commenters stated that to maximize the benefit of any net job creation it is essential that these new jobs are good jobs that provide family

- sustaining, prevailing wages and benefits as well as support Buy American polici es.
Commenters stated that infrastructure, plant construction, and/or maintenance performed as a result of the CPP must be made by qualified individuals installing domestically

- manufactured products and technology, and that in order to make these updates and upgrades as safe and smooth as possible individuals employed should have completed or tested

- out of a federally registered apprenticeship program. The commenters stated that for those individuals performing construction and maintenance on nuclear gene rating facilities, it is important the training they complete meet the standards of the Nuclear Mechanic Apprenticeship Process.

Commenters added that when EPA looks back at the comprehensive energy and climate legislation that passed in June of 2009, EPA actually had a recognition that some parts of the country were going to be more adversely affected. EPA had workforce energy worker training programs. EPA had

-- addressing the issues of workers displaced due to emissions regulations and grants for colleg es and universities to retool and retrain folks.

Response 5.m. : The EPA agrees that there will be a need for workforce retraining as part of the transition to a lower carbon economy. As noted above, we have been seeing many states implementing replicable p rograms to transition their workforces

– by working in public

- private280 partnerships with their community colleges and businesses

- to secure an economic advantage as they transition local economies. In addition the Department of Commerce, Department of Labo r, Small Business Administration, and the Appalachian Regional Commission have together created an initiative to issue grants to partnerships of regionally

- driven economic development and workforce development organizations in impacted coal communities. 7

The timeframe of the CPP from plan development to plan implementation affords states, utilities and other stakeholders the ability to work together to tailor their plans in the ways that best support their communities. The EPA strongly encourages states t o put effort into workforce development and creation of safe, good paying jobs, in order to help communities transition to a lower carbon economy.

5.n. Commenters stated that biomass co

- firing would create many additional jobs and should be included in the Clean Power Plan

Commenters stated that the inclusion of forest

- derived biomass feedstocks in the Clean Power Plan creates economic development opportunities across many sectors and throughout the supply chain. The commenters stated that an increase in bi omass feedstocks coming from sustainably managed forests would provide economic stimulus and job growth beginning with the individual forest owner and carrying through the logging, transportation and electricity generation industries.

Commenters stated th at biomass co

- firing in the U.S. Southeast is estimated to create 6 times the jobs lost from reduced coal demand, due to the increased labor needed for biomass supply chains. The commenters stated that a 500MW coal plant supports 2,540 direct jobs, while a 500MW biomass plant supports 3,480 jobs.

Response 5.n. : The EPA acknowledge s the commenters remarks on the job creation potential of biomass co

- firing

. A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in s ect ion VIII.I.2.c and Section VIII.K.1 of the final rule preamble. A discussion regarding employment and economic development can be found in s ection VIII.G.3 and in Section XI.E.

Comment 6 : Plant closures resulting from the Clean Power Plan will have negati ve economic impacts.

Commenters discussed the impacts that may occur should the proposed rule to lead to plant closures. Commenters stated that Pennsylvania's electric generators operate in a competitive market, not a rate

- based market, and will have to i ncorporate the costs of facility improvements into their bidding price when they compete for the ability to provide electricity on an economic basis. The commenters stated that the combination of upfront capital costs to achieve these

7 See https://www.whitehouse.gov/the

- press

- office/2015/03/27/fact

- sheet

- partnerships

opportunity

- and

- workforce

- and

- economic

- revitaliz

.281 improvements, paired with tremendous uncertainty about the ability to ever recover them, may lead to a decision to close the plants that will translate to a significant economic impact to all consumers of energy, including business, in the state.

Commenters stated that additi onal plant closures will continue to have a real and negative impact on state and local economies and that higher electricity costs are akin to a regressive tax that cannot easily be absorbed. Commenters encouraged EPA to withdraw the proposal to avoid the closure of coal fired power plants that strengthen local economies and provide electricity at reasonable rates. The commenters stated that environmental regulations have weakened the American economy by driving businesses overseas and that the benefits of the proposed rule cannot be assured or monetized.

Commenters cited EPA's projections that five of the seven coal units in Arkansas and all of the coal units in Arizona would shut down as a result of the proposed rule. As such, the commenters stated that these high wage job losses would devastate local economies, even in areas where new NGCCs are constructed because NGCCs require less than one

- third of the staff required to operate a coal fired plant.

Commenters urged EPA to consider the economic, social a nd reliability impact that would result from three local generating plants shutting their doors including the loss of 330 jobs and over $20 million in wages before benefits, the loss of tax revenue, sales tax and the need for increased government assistanc e to feed families. In addition, the commenters stated that the job skills of the workers cannot be easily transferred to other occupations, and other employees in management, contracting, supplying, railroad, mining, electrical and service will also lose their jobs.

Commenters opposed the Clean Power Plan as proposed because it will lead to the closure of 41 to 49 gigawatts of coal fired generated capacity by 2020, resulting in the loss of 52,000 permanent direct jobs in the utility, rail, and coal mining sectors and an additional 100,000 direct jobs. Commenters further stated that EPA's number must be viewed with suspicion because EPA claimed the MATS rule would close only 4.7 gigawatts of coal generation, but experts have now confirmed that 56 gigawatts of coal generation will be lost by 2016. Taken together, the commenters stated that the MATS and the Clean Air Plan will close approximately 40 percent of today's coal fleet and result in a loss of over 400,000 American jobs at a time when the nation conti nues to recover from the worst recession since the Great Depression.

Commenters stated that EPA's alternative BSER may result in the shutdown of all coal and oil

fired units and up to 80% of NGCC units in New Jersey. The commenters stated that the shutdown of many NGCC units in New Jersey would result in greater reliance on out

- of

- state coal units, resulting in higher CO2 and NOx emissions.

Commenters stated that, in addition to the impact on electric rates, these retirements will cause jobs to be lost and will have adverse impacts on local economies and local government tax revenues. The commenters stated that these impacts have already been seen in the local economies of the areas where plants have already been shut down. Commenters stated that closing th is much generation in such a short timeframe also raises serious concerns about the ability to maintain reliability and meet peak demand, especially during extreme weather. The282 commenters assumed there are still federal requirements that a utility maintain an adequate generation reserve, so reliability is attained.

Commenters stated that to the extent power plants are forced to close in my county, our county tax revenues would be diminished, as would our ability to pay for the services our citizens rely
up on the county to provide.

Commenters stated that as plants close or scale back operations, the loss of jobs and tax income in communities across the region will be a significant blow to the economy at the local level

- impacting families, businesses, scho ols, roads and essential services.

Commenters stated that the effect of Block 2 would force many of Texas' lignite power plants to close, directly harming the employees and communities of the co

- located lignite mines. The commenters stated that since thes e power plants are mine

- mouth plants, there is little if any potential to seek other uses for this lignite, requiring the shutdown of the mine. The commenters stated that this would lead to significant job losses, stranded resources at these power plants a nd serious reliability risks across the entire state.

Commenters stated that two power plants employ 218 and 332 full

- time equivalent (FTE) staff, and contribute to approximately 4,000 jobs per year in the state of Arizona, nearly 70% of which are located in Apache County. The commenters stated that if these plants are closed Apache County could lose 2,700 FTE jobs, $600 million in annual gross state product, half of its property tax value to be eliminated and two thirds to three quarters of the property t ax value that supports the local school districts. The commenters stated that when Building Block 2 is applied in the state, Arizona has no ability to retain newer or upgraded EGUs that have significant remaining asset value. The commenters urged EPA to pr ovide Arizona with the same level of flexibility to achieve state goals that is afforded to the rest of the nation.

Commenters stated that EPA's cost effectiveness evaluation did not take into account the financial impacts to communities that depend on th e direct and indirect economic contribution from nearby coal

- fired power plants. The commenters stated that Apache County Arizona could lose 2,700 jobs and $600 million in annual gross state product, over half of Apache County's property tax value could be eliminated, including two thirds to three quarters of the property tax value that supports the local school districts, and the associated exodus of plant employees from the region could potentially result in a drop in housing values, shuttering of local b usinesses, and closing of schools.

Commenters stated that additional closures would drive up electricity rates across the country, reduce the competitiveness of U.S. manufacturers on the international stage, and cause enormous damage to the economies of c ountless coal communities. The commenters stated that such closures would undermine the reliability of the grid, reduce fuel diversity, and damage U.S. energy security. The commenters stated that the proposal arbitrarily fails to consider these important i ssues.
Commenters stated that if Gibbons Creek were to close down in anticipation of the proposed Greenhouse Gas Rule coming on top of the other environmental regulations affecting coal

- fired power plants there would be direct impacts to TMPA's Member Cit ies, to their ratepayers, to the283 employees of TMPA, and to the communities surrounding the Gibbons Creek power plant. The commenters stated that the impacts to the Member Cities and their ratepayers are associated with stranded costs of investment in the p lant and its facilities and the costs of replacing the lost power. The commenters stated that the loss of employment of the approximately 100 TMPA employees would affect the employees and their dependents. The commenters stated that the loss to the local c ommunities would be significant as TMPA is a major contributor to the county and three school districts through payments in lieu of taxes (PILOT) totaling approximately $1 million per year.

Commenters stated that union laborers are participating in the con versions of coal plants to natural gas, they are building the pipeline infrastructure to meet the needs of the growing natural gas demand, they are building three of the five nuclear reactor units under construction, and they are building wind farms and so lar fields at unprecedented scale. The commenters stated that the loss of outage work in coal

- intensive areas creates a disproportionate burden on the working families of these communities. The commenters stated that the City of Miamisburg stands to lose 7 .4% of its property tax base with the closing of the O.H. Hutchings Power Station and the closing of AEP's Muskingum River Power Plant will cost each of the Frye and Wolf Creek School Districts 10% of their operation funds. The commenters stated that the p roposed rule would place an additional 1,675 operations workers (150

- 200 FTE Laborers alone) and hundreds more Laborer outage workers at risk at the nine remaining Ohio coal plants subject to regulation. The commenters stated that EPA in their guidance to states should recognize the need to require provisions for displaced workers, that these policies are designed to maximize construction job creation (preferably in the energy sector) and assist workers in transitioning to them, and that all
new programs cr eated in pursuit of demand side or energy efficiency construction require responsible standards to guarantee that as new sectors emerge they provide family

- sustaining jobs. The commenters stated that one avenue for providing policy solutions for displaced workers would be for EPA to require components in the state planning process such as an economic impact report relevant to the power sector.

Commenters stated that coal

- fired power plants are an important source of high wage employment and most are locate d in rural areas that have few or no alternative employment options. The commenters stated that the abrupt closure of existing coal

- fired power plants would devastate these communities; even areas that might receive some re

- employment benefit from the cons truction of new NGCCs would face economic hardship, because NGCCs require less than a third of the staff required to operate comparable coal

- fired power plants. The commenters stated that EPA's RIA fails to adequately consider the costs of compliance for s tate and local economies and, instead, inappropriately focuses on national level impact; this analysis is inapposite to the proposed rule, which proposes emission rate goals on a state

- by

- state basis.

Commenters stated that the retirements Building Block 2 precipitates would have dramatic local economic impacts. The commenters stated that shutting down the Coronado and Springerville Generating Stations in Apache County, Arizona, would cause over 4,000 individuals to lose their jobs, nearly 70 percent of w hich are located in Apache County, and cut $600 million in annual gross state product from Apache County. The commenters stated that with limited alternative employment opportunities, the resulting exodus of plant employees would depress County housing val ues, shutter local businesses, and county services would be curtailed as remaining County residents would be unable to alone shoulder the entire financial burden of supporting284 communal services, such as schools, medical centers, library districts, and fire districts. The commenters stated that the RIA only analyzes national employment impacts. The commenters stated that the Proposed Rule must give the states greater discretion in determining the appropriate performance standards for affected units.

Commenters stated that the proposal would have tremendous impacts on the communities where Tri

- State owns and operates coal

- fired EGUs if those EGUs are forced to shut down or to curtail their operations severely. The commenters stated that when indirect i mpacts of Craig Station are taken into account, the plant is responsible for $489.6 million in regional total output. The commenters stated that Craig Station is responsible for providing three of Moffat County's top ten employers: Tri

- State, the Trapper M ine, and the Colowyo Coal Mine, and that Craig Station supports 100 percent of the employees at the Trapper Mine and the Colowyo Mine. The commenters stated that mining accounts for better than 18 percent of the annual labor income generated in Moffat Coun ty, and Tri

- State accounts for better than 18 percent of the property tax revenue in the county.

Commenters stated that in the face of rising costs and lower revenue, municipal governments in the short

- term must either raise taxes and fees to offer the sa me level of services or reduce their level of services. Commenters stated these services provide citizens with other public goods such as public education, public safety, public recreation, public roads, public health, and others.

Commenters stated that t he State of Arizona and Apache County in particular will be severely detrimentally impacted if both Coronado and Springerville power plants are forced to cease operation. The commenters stated that Coronado and Springerville combined account for 4,009 dire ct, indirect, and induced jobs in all private non

- farm employment sectors in the State of Arizona (in CY2013), including 2,740 jobs in Apache County alone, and that these jobs alone equate to $713.5 million (2013 $) real GSP, including $230.2 million (2013 $) RDPI for the State of Arizona in CY2013

. The commenters stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in gross state product, and $170 million real disposable personal income. The commenters estimated that over half (56%) of Apache County's property tax value could be eliminated, including two

- thirds to three

- quarters of the property value that supports the local school districts, and with limited alternative employment opportunities, the associated exodus of plant employees from the region could potentially result in a drop in housing values, shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library district s, fire districts, etc., currently born by the utilities and their employees.

Commenters stated that if the proposed Clean Power Plan requires the Jim Bridger Power Plant to shut its doors, approximately 350 power plant employees would lose their jobs, an d an estimated 400 employees from the Jim Bridger Coal Mine and 185 employees from the Black Butte Coal Mine would also lose their jobs. The commenters stated that as a result of this proposed plan, 935 Sweetwater County employees directly employed in the power generation and coal mining industries could be become unemployed. The commenters stated that the closing of the Jim Bridger Power Plant and Jim Bridger and Black Butte Coal Mines could result in indirect employment and economic impacts on numerous lo cal, regional and national service companies that depend on the viability of these operations. The commenters stated that ad valorem tax revenues for these operations represent approximately 11 % of property taxes paid in285 Sweetwater County. The commenters stated that if these power plant and coal related tax revenues are lost along with the tax revenues generated by the associated residential, business and industrial sectors of the economy, there will be devastating consequences for the Sweetwater County Me morial Hospital, the Sweetwater County Events Complex, Southwest Counseling Service, the maintenance of 1200 miles of roads, the provision of an effective level of law enforcement and others.

Commenters stated that closure of the coal generating stations in Arizona would devastate the economies of our rural communities, where the plants support high

- wage employment and provide a critical tax base for schools and local governments. The commenters stated that rate increases resulting from the Proposed Rule w ould disproportionally affect rural consumers and exacerbate the growing problem of poverty in these areas.

Commenters stated that the loss, or a major scale back, of the Flint Creek Power would result in the loss of jobs and tax income in my community an d would possibly devastate the Gentry School District. The commenters stated that the loss or diminishing of operations of the other coal fired plants in Arkansas would have an immediate and lasting effect on all Arkansas Public Schools.

Commenters stat ed that Federal regulations have already forced two plants in his district to close over the last two years. The commenters cited a National Mining Association projection that more than 300 plants would retire nation

- wide due to EPA rules over the next six years. The commenters cited a Heritage Foundation study predicting that the EPA's anti

- coal policies could terminate 600,000 American jobs by 2023 while causing economic growth to drop by more than $2 trillion.

Commenters stated that under the proposed g uidelines, EPA projects that its proposed Clean Power Plan will increase electricity prices by a nationwide average of 4 percent to 7 percent, will increase natural

- gas prices by 9 percent to 12 percent, and will cause the retirement of 46,000 megawatts to 49,000 megawatts of coal

- fueled electric

- generating capacity. The commenters stated that the EPA's proposal will have a major impact on energy resources, electric ratepayers, jobs, and the economy of the Midwest region.

Commenters stated that the CPP ru le will lead to the closure of coal

- burning power plants throughout the United States, resulting in the loss of more than 52,000 jobs in the coal, utility and railroad industries by 2020, and further direct job losses in those industries will reach 65,000 by 2030 as a result of this rule.

Commenters stated that these job losses will have a ripple effect in the communities throughout the coalfields and beyond, where more than 208,000 jobs will be lost by 2030.

Commenters stated that the proposed rule threa tens its viability. The commenters stated that EPA's Regulatory Impact Analysis indicates that the rule would cause Appalachian coal production for electric generation to decline from 140 million tons in the 2020 base case to 87

- 91 million tons, versus 24 6 million tons of coal in 2009. The commenters stated that decreased coal production will result in significant job dislocations, income losses, and diminished tax bases. The commenters stated that each coal job has a 5 to 1 multiplier effect on the mine s ervices,286 consumable supplies, and the local communities where the mines and mine employees spend the revenues and household income generated from coal sales. The commenters stated that the proposed re

- dispatching of coal generation to natural gas combined

- cycle units, unrealistic energy efficiency goals, and new renewable energy targets would create a cycle of increasing coal fired power plant and mine closures, direct and indirect job losses, and higher electricity prices adversely impacting manufacturing and other key job

- intensive sectors.

Commenters stated that forcing Minnesota to reduce its carbon emissions by 41% by 2030 is not fair, as midwestern states do not have to reduce by such a high percentage. The commenters stated that this will force the s hutdown of many coal power plants, eliminate thousands of jobs in Minnesota, drive the cost of power up and create a terrible burden on lower income families. The commenters stated that it would like to see No. 3 generating plant stay online to keep some o f the support and jobs in Becker, MN.

Commenters stated that requiring Minnesota to reduce carbon emissions by 41% by 2030 is cost prohibitive, too aggressive, and will hurt our economy. The commenters stated that this will force the shutdown of many coal power plants and result in the loss of thousands of jobs (including many in his legislative district) and will drive the cost of power up, which will create a burden on all Minnesota families and especially low income families.

Commenters stated that for many coal

- fired plants, reaching these extreme goals in such a short period of time will prove either economically unfeasible or physically impossible (or both), thus forcing their premature retirements. The commenters stated that the proposed rule will end up slashing not CO2 emissions, but thousands of good

- paying middle

- class jobs instead. The commenters cited projections of retirement of about 12 percent to 19 percent of all coal

- fired capacity projected to be in service in the base case) by 2020 unde r the range of scenarios analyzed, and its impact on well over 135,000 stable, well

- paying jobs for middle

- class families that the industry provides. The commenters stated the most obvious consequence of the widespread closure of coal

- fired power plants wi ll be massive job losses. The commenters stated that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries.

Commenters stated that as plan ts close or scale back operations, the loss of jobs and tax income in communities across the region will be a significant blow to the economy.

Commenters stated that EPA recognized localized negative impacts of the proposed rule in its RIA. The commenter s stated that the first coal mining jobs to be lost will be those at mines that produce the highest priced coal

- notably, mines in eastern Kentucky and that the impact of this proposal will almost guarantee the broadening and deepening of the poverty alre ady dominant in eastern Kentucky.

Commenters stated that many coal

- fired power plants, including Tri

- State plants, are located in rural areas where the entire community is supported by the power plant. The commenters stated that the job loss will extend f ar beyond the jobs in the plants and mines themselves and that power plants are often a major source of employment and revenue for the communities in which they are located.287 Commenters cited the United Mine Workers of America prediction that there will be 75,000 direct coal generation jobs lost by 2020 and 152,000 by 2030. The commenters cited the International Brotherhood of Electrical Workers that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries, and that high

- skill, middle

- class jobs would be lost, falling heavily in rural communities that have few comparable employment opportunities. The commenters cited the US Chamber of Commerce projections that there will be 224,000 jobs lost on average each year through 2030, and the rule will result in a loss of $50 billion in GDP on average. The commenters cited Dr. Gabriel Calzada Alvarez, who examined the impact of renewable energy policies in Spain, found that 2.2 jobs were lost for every one job created.

Commenters stated that the drastic reduction in coal generation will cost 52,000 direct and 100,000 indirect jobs. The commenters stated that MATS and the CPP will close 40% of the coal
ge neration that exists today, and eliminate 400,000 or more irreplaceable American jobs. The commenters stated that under the CPP Colorado will not receive credit for plant closures already made and will be forced to close at least three additional coal

- fire d plants. The commenters stated that in at least 22 other states the impact of the CPP will not be limited to the coal sector.

Commenters estimated that roughly 6% of its members will lose their jobs if the Clean Power Plan is finalized in its current fo rm. The commenters stated that local power plants provide jobs for hundreds, and often times, thousands of workers. The commenters stated that the CPP will influence the cost of electricity for residents and businesses, impacting regional growth, employmen t, taxes, and wages. The commenters predicted that more than 500 coal

- fired power plants will be shut down, and 41GW

- 49GW of coal

- based electric generating capacity would be closed by 2020.

Commenters stated that during the period 2001

- 2013, while its ene rgy costs escalated, California lost 650,000 manufacturing jobs

-- approximately one

- third of all California manufacturing jobs. The commenters stated that 34 percent of the nation's welfare recipients live in California. The commenters stated that Californi a has shown the disastrous consequences of abandoning coal as an energy source and pushing jobs for the working class out of its borders, often to Mexico and other countries. The commenters stated that that Missouri is at the crossroads between the South

a nd Midcontinent Independent System Operator power regions, which are expected to incur "over half the U.S. total costs during the 2014

- 30 timeframe," and "will shoulder more of the economic consequences of compliance."

Commenters stated that the proposal has the potential, based on EPA 2025 IPM, to shutter over 13,000 MW of the 22,000 MW of coal fired generation in the state of Texas, including San Miguel. The commenters stated that if the EPA's IPM is correct, there are 350 power plant and mine workers at San Miguel that will be put out of work due to this rule

- a full 20 years before the useful life of the unit has been reached. Commenters stated that in Utah, coal

- fueled electricity is responsible for meeting approximately 80% of the state's energy need s, and it is crucial that Utah maintains the economic development competitiveness that coal provides. The commenters stated that the coal mining industry is one of the most important industries in the State of Utah, due not only to the number of jobs suppo rted by the coal industry, but also to the economic linkages with other sectors of the economy and the high wages in the mining industry relative to other sectors of the Utah economy. The commenters stated that these high

- paying coal288 mining jobs are locate d in a rural part of the state in which it would be difficult, if not impossible, to replace them.

Commenters stated concern regarding the negative impact to ratepayers of having to pay higher rates associated with the utilities' needs to recover existing costs and the additional costs that they will incur to comply; the negative impact to ratepayers of having to pay higher rates associated with utilities requiring higher returns to compensate them for the additional risks that the utilities will face; and the negative impact to ratepayers associated with paying higher rates for any responsibility they may experience due to being made responsible for unrecovered costs if plants are shuttered or if plant output is reduced.

Commenters stated that the draft r ule summarily discards billions of dollars in investment Georgians have made in state

- of

- the

- art emissions controls on coal

- fired units, and EPA’s proposal assumes that Georgia will retire another 3900 megawatts of coal

- fired generation in response to this rule, thereby stranding t he investment in those generating units, including billions of dollars' worth of environmental controls.

Commenters stated that the premature shutdown of existing coal plants with a remaining economic life will likely cause highe r electric rates and increased costs for the nation's electricity consumers than EPA has projected. The commenters stated that the net present value cost impacts range from about $7 billion to almost $430 billion, with associated rate increases of 5.47
to 55.4 percent.

Commenters stated that EPA must consider the economic consequences of stranded assets and tailor the Proposed Rule to minimize these impacts. The commenters stated that Building Block 2's emission reductions requirements assume increased NGC C usage and massive retirement of existing coal and oil/gas steam generation, and that these stranded costs would be borne either by the plants' owners or by ratepayers where the stranded assets have yet to be fully amortized. The commenters stated that th e proposed rule would place an unreasonable burden on electric consumers who would be forced to cover the cost of prematurely retiring these units plus the cost of the new NGCC units needed to replace them.

Commenters stated that coal job losses and risin g electricity prices pose a threat to Kentucky consumers and our essential industrial manufacturing economy. The commenters stated that it is irresponsible for EPA to suggest that a $2 billion loss to our state gross domestic product coupled with a ten per cent increase in electricity costs is "modest". The commenters stated that the proposed rule would strand another $4.5 billion previously invested in existing assets to achieve compliance with the existing mercury and air toxins standard. The commenters s tated that EPA must consider reasonable safety net provisions.

Commenters stated that the IPM model improperly assumes that compliance actions related to existing generating assets and construction of new generating assets could be deployed in 2016 and do es not consider the time necessary to put in place accompanying regulatory, legislative and compliance decisions. The commenters stated that virtually all of the reductions in CO2 emissions from affected EGUs come from reduced utilization of coal

- fired EG Us and that EPA must determine the diminution in asset value to the owners of those existing sources, and the local and regional economic disruption and unemployment that would result from the proposal.289 Commenters stated that it is unclear if the IPM mode l incorporates stranded costs or ancillary transmission and other investment costs into its projections of electricity rates impacts. The commenters stated that ratepayers would still be required to pay the costs associated with retired units in addition t o the costs of any other measures that would have to be deployed in response to the rule.

Commenters stated that EPA failed to takes into account the costs of stranded investment and cited examples from Arizona, Florida, Mississippi and Kansas. The commenters stated that EPA estimated that MATS alone would drive the installation of 20 GW of dry scrubbers, 44 GW of direct sorbent injection, 102 GW of fabric filters, 63 GW of scrubber upgrades, and 34 GW of electrostatic precipitator upgrades, with projected capital and operating costs of these installations of $9.4 billion annually. The commenter s stated that with EPA now predicting an additional 49 GW of retirements in addition to the MATS

- caused retirements, a great deal of this investment is likely to be stranded. The commenters stated that it is consistent with Section 111(d)(1)(B), for states to determine that sources that have extended their useful lives by installing long

- lived and expensive pollution control systems should not be required to prematurely retire and leave electric ratepayers with tens or hundreds of millions of dollars in

una mortized investments. The commenters stated that EPA does not explain whether, if a state goal would be made less stringent because of stranded investment, the state would be required to make additional and compensating GHG reductions either in 2020 or lat er that decade. The commenters stated that EPA should permit states to exempt sources from EPA's requirements to the extent the states determine that compliance would create stranded investment.

Commenters stated that EPA's regulations on coal

- fired plant s have forced and will continue to force closures of generation facilities that have already been retrofitted with pollution controls. The commenters stated that customers would see a rate shock if these plants shutdown or are underutilized because they wi ll continue to pay for the stranded costs of the environmental investments in addition to new investments associated with the replacement resources required from plant closures.

Commenters stated that Nebraska is the only state whose power system is entir ely publicly owned and managed. The commenters stated that its public power boards have a statutory duty to provide the lowest possible cost energy and that the implementation of the Clean Power Plan would critical investments at risk.

Commenters stated t hat EPA has underestimated the proposal's impact on electricity prices. The commenters stated that the proposal would accelerate the retirement schedule and increase the costs associated with the transition from existing coal

- fired EGU capacity to other s ources of electricity. The commenters stated that there will be a significant cost in the form of stranded assets that will result in significant economic harm by premature retirement. The commenters stated that the proposal would change the market dispatc h of generating units by reducing the availability of the most economic generating resources. The commenters cited a study by Energy Ventures Analysis Inc. that on a percentage basis, the U.S. industrial sector would be affected most severely with a 64 to 92% increase in electricity and gas, affecting energy intensive industries in the U.S. such as aluminum, steel and chemicals manufacturing.290 Commenters stated that the compliance cliff imposed by the interim compliance period will likely have many adverse impacts, including creating substantial stranded investment from the premature shutdown of many existing coal

- fired EGUs that could be forced to stop operating by 2020 given the front

- loading of Building Blocks 1 and 2 and the steep reduction in the CO2

em issions required at the start of the interim compliance program. The commenters stated that that consumers would have to pay for the same electricity generating stations twice, first the billions of dollars they are already paying or will be paying for the pollution controls that were previously installed or are being installed, and second for the replacement capacity that will be required. The commenters stated that this can be avoided by eliminating the interim compliance period.

Commenters stated that t he four BBs that are the basis of the mandatory standards for the states assure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt, which will cause major stranded investment costs to consumers. The commenters stated that these stranded asset costs were not included in the national cost assessment developed by EPA, and that EPA also failed to assess the costs of building new gas pipelines and transmission l ines that would be required by the closure of so many coal plants. The commenters stated that the approach threatens continuing electric reliability.

Commenters stated that reduced demand for electricity does not translate into reduced electricity prices. The commenters stated that the proposed rule will shift generation away from Ohio's well

- controlled and economical coal

- fired fleet to more expensive generating technologies, and force the dispatch of electricity away from economic models to environmental ones. The commenters stated that in response to the Mercury and Air Toxics standards, the remaining coal

fired fleet in Ohio will be well controlled, efficient, and economic, and many plants have installed environmental controls in the last decade at subs tantial costs. The commenters stated that there is potential under the proposed rule that these units will become uneconomical, and thus represent significant "stranded costs" to Ohio rate

- payers.
Commenters stated that EPA has underestimated the proposal 's impact on electricity prices. The commenters stated that the proposal would accelerate the retirement schedule and increase the costs associated with the transition from existing coal

- fired EGU capacity to other sources of electricity. The commenters s tated that there will be a significant cost in the form of stranded assets that will result in significant economic harm by premature retirement. The commenters stated that the proposal would change the market dispatch of generating units by reducing the

a vailability of the most economic generating resources. The commenters cited a study by Energy Ventures Analysis Inc. that on a percentage basis, the U.S. industrial sector would be affected most severely with a 64 to 92% increase in electricity and gas, af fecting energy intensive industries in the U.S. such as aluminum, steel and chemicals manufacturing.

Commenters stated that the compliance cliff imposed by the interim compliance period will likely have many adverse impacts, including creating substantial stranded investment from the premature shutdown of many existing coal

- fired EGUs that could be forced to stop operating by 2020 given the front

- loading of Building Blocks 1 and 2 and the steep reduction in the CO2 emissions required at the start of the in terim compliance program. The commenters stated that that consumers would have to pay for the same electricity generating stations twice, first the291 billions of dollars they are already paying or will be paying for the pollution controls that were previousl y installed or are being installed, and second for the replacement capacity that will be required. The commenters stated that this can be avoided by eliminating the interim compliance period.

Commenters stated that the four BBs that are the basis of the m andatory standards for the states assure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt, which will cause major stranded investment costs to consumers . The commenters stated that these stranded asset costs were not included in the national cost assessment developed by EPA, and that EPA also failed to assess the costs of building new gas pipelines and transmission lines that would be required by the clos ure of so many coal plants. The commenters stated that the approach threatens continuing electric reliability.

Commenters stated that reduced demand for electricity does not translate into reduced electricity prices. The commenters stated that the propose d rule will shift generation away from Ohio's well

- controlled and economical coal

- fired fleet to more expensive generating technologies, and force the dispatch of electricity away from economic models to environmental ones. The commenters stated that in re sponse to the Mercury and Air Toxics standards, the remaining coal

fired fleet in Ohio will be well controlled, efficient, and economic, and many plants have installed environmental controls in the last decade at substantial costs. The commenters stated th at there is potential under the proposed rule that these units will become uneconomical, and thus represent significant "stranded costs" to Ohio rate

- payers.
Commenters stated that EPA did not consider remaining useful life as required under the CAA,

nor does its proposal allow the states to consider it. The commenters stated that Arizona has virtually no flexibility.

Commenters stated that EPA's proposed guidance will require coal

- fired power plants, currently installing hundreds of millions of dollars o f air pollution control equipment (to comply with the federal Regional Haze Program and Mercury and Air Toxics standard) to shutdown early and strand invested assets. The commenters stated that utility companies will be forced to recover the cost of abando ned air pollution control devices while at the same time recovering replacement generation costs from customers. The commenters stated that EPA should abandon state goals and allows states to base the best system of emission reduction on the affected elect ric generating units within their jurisdiction.

Commenters stated that if adopted as a stand

- alone standard of performance, the application of BB2 as proposed would require the retirement of Arizona's entire coal fleet, which makes up approximately 36 per cent of Arizona's generation mix, by 2020. The commenters stated that the retirement of the entire fleet by 2020 would result in unreasonable costs in the form of enormous stranded investments and rate payers, would end up paying twice for the same genera tion: once to retire the debt on the prematurely retired assets and again to fund replacement generation.

Commenters stated that utilities that would be required to prematurely close viable coal plants with years of remaining operating life, and given the limited time period for re

- dispatch, would be forced to purchase energy (that may not be available) from other utilities. The commenters292 stated that their consumers would lose the investment in the capital intensive coal plants and, at the same time, be f orced to pay for new transmission lines and pipelines to other utilities to buy electricity from gas generation plants they do not own while their own units sit idle. The commenters stated that the four building blocks that are the basis of the mandatory s tandards for the states assure that many utilities will have to prematurely shut down capital intensive, low cost coal plants, many with long remaining operating lives and unpaid debt, including debt from recently installed emissions controls to meet Maxim um Achievable Technology Standards (MATS) and other environmental requirements, which will cause major stranded investment costs to consumers. The commenters stated that these stranded asset costs were not included in the national cost assessment developed by EPA, and that EPA also failed to assess the costs of building new gas pipelines and transmission lines that would be required by the closure of so many coal plants.

Commenters stated that the electric bill savings projected by EPA in the Proposed Rule may not materialize and that EPA's analysis is devoid of any analysis with respect to the cost of early retirement of used and useful plant that has not been fully paid for through utility rates. The commenters stated that if the Final Rule forces prematu re retirement of facilities in the service territories of one of the state's three IOUs, North Carolina ratepayers will likely bear some or all of these costs.

Commenters stated that EPA failed to appropriately account for the more than 70,000 MW of facil ities that have already been retired since the 2012 baseline or may be scheduled to retire during the interim compliance period or shortly thereafter. The commenters stated that States must either identify other emission reductions

- for example by acceler ating implementation of RPS or EERS programs

- or require costly over

- compliance later in the interim period which will ultimately prove unnecessary to achieve the final emission reduction targets. The commenters stated that it is unreasonable to suggest t hat all the coal

- fired EGUs that EPA projects will retire by 2030 will have reached the end of their useful lives and would have been retired even in the absence of this rulemaking, and if States were permitted to consider the remaining useful life of exis ting sources when setting standards of performance, they may impose less stringent standards that would avoid the premature closure of coal

- fired EGUs. The commenters stated that many coal

- fired EGUs that would be forced to retire under the proposal would be unable to recoup their capital investments and there will remain a serious question of who should be responsible for bearing the economic burden of the stranded assets that will result from the premature closure of these coal

- fired EGUs.

Commenters sta ted that Arizona has a relatively new coal

- fired fleet and several of the coal

- fired units recently have been equipped with expensive pollution control technology. The commenters stated that the value of the assets that could become stranded in 2020 is $3. 8 billion

, and that the impact of this stranded investment is exacerbated by the fact that new generation would have to be built to replace the stranded assets, thus compounding the cost impact to Arizona customers.

Commenters stated that failure to amend the state emission limits will almost certainly result in forced early retirements, which would constitute a taking of private property in contravention of the Fifth Amendment to the United States Constitution. The c ommenters stated that the economic impact of forcing Newmont to close the TS Power Plant, which has more than 20 years of remaining useful life, would be devastating on two fronts: (1) the closure of the TS293 Power Plant would result in stranded assets of ap proximately $450 million; and (2) closure of the TS Power Plant would leave Newmont without a reliable source of power in an area of northern Nevada with both limited generation and transmission capacity. The commenters stated that the burden placed on coa l

- fired assets, including the TS Power Plant, is too great to justify any unquantified purported benefits served under the Proposed Rule.

Commenters stated that the communities supplied by MEAG will remain contractually obligated to pay for generation whi ch EPA has unilaterally decided cannot be utilized in the future. The commenters stated that the communities that comprise MEAG have committed to fund over $ 400 million for flue gas desulfurization systems, selective catalytic reduction systems, and sorbe nt injection and baghouse systems for mercury control at these units to meet EPA and Georgia environmental requirements. The commenters stated that the resulting stranded costs of these investments will be borne over the next 25 years by ratepayers in the communities.

Commenters stated that it would be an economic disaster for our customers and the State of Nebraska if EPA's Clean Power Plan would force closure of NPPD (a low cost generation source) or require the investment of significant funds to meet th e Plan as proposed and raise the costs of this plant. The commenters stated that its diverse generation mix has evolved to include natural gas, hydro, nuclear and wind in addition to coal, and allows NPPD to produce 42 percent of their generation carbon fr ee.
Commenters stated that investments in air pollution controls (APCs) may become stranded costs, depending upon the final GHG Rule. The commenters stated that Dallman Unit 4 won accolades from engineering and environmental groups alike, and has some of the most advanced APCs of any power plant in the country, exceeding the controls of much larger neighboring investor

owned utilities. The commenters stated that in 2007, an Energy Assessment of Dallman units 31, 32 and 33 was performed to determine ways t o improve efficiency and reduce energy loss, and CWLP then implemented many of the recommendations. The commenters stated that having recently assessed and implemented such recommendations will make attaining an additional 6% heat rate improvement economic ally if not physically impossible.

Commenters stated that the county as a whole could also see a devastating effect if the coal

- fired plant which has received more than $600 million in clean technology upgrades in the last decade were deemed to be insuffi cient to meet the proposed standards.

Commenters stated that the proposed emissions reductions will be impossible for Arizona's rural Electric Cooperative members to attain. The commenters stated that the impact to the citizens of this state and the econo my cannot be overstated.

Commenters stated that the original cost of its ownership interest in Colstrip Unit 4 will not be fully depreciated until 2043. The commenters stated that any scenario resulting in the need to replace our Colstrip generation with , for example, a combination of renewables and associated balancing/regulation requirement (i.e. simple cycle gas plant generation), would mean our customers would be paying for the remaining investment in Colstrip Unit 4 and the replacement generation. Th e commenters stated that by the end of 2015, NorthWestern Energy, Otter Tail Power Company and Montana

- Dakota Utilities Company will have completed installation of an approximately $400 million air quality control system which will reduce nitrogen oxide, s ulfur294 dioxide, particulate matter and mercury by about 90%. The commenters stated that the assumptions in the proposed Clean Power Plan reduce the capacity factor of the Big Stone Plant to 23%, a level which would result in stranding the $400 million air q uality control system as well as the remaining unrecovered costs of each owner in the plant. The commenters stated that the plain language in Section 111(d) precludes EPA from exercising any discretion with respect to restricting the states' ability to inc orporate remaining useful life and other factors into standards of performance as guaranteed by Congress.

Commenters stated that the proposal will retire or significantly reduce the operation of Seminole's facilities (both SGS and MGS), resulting in sever e economic impacts on Seminole. The commenters stated that a forced retirement prior to the end of their useful life will result in substantial stranded debt, as well as additional costs associated with generation to replace these units. The commenters sta ted that IPM also projects that the proposal would have dramatic impacts on the NGCC and peaking units at MGS. The commenters stated that the IPM Policy Case projects that these units will operate in 2025 at a capacity factor of just 16.1 percent,
represen ting a two

- thirds reduction in generation from 2012 to 2025. The commenters stated that EPA has not considered, and must account for, the severe economic impacts Seminole would face if the NGCC and peaking units at MGS are forced to reduce generation.

Com menters stated that costs associated with the premature retirement of a significant number of coal

- fired EGUs and the rushed construction of replacement infrastructure, in the form of natural

- gas and renewable

- energy generation units, transmission & pipeli ne will ultimately be borne by Oklahoma and its ratepayers. The commenters stated that a coal

- fired unit for which Building Block 1's heat

- rate improvement investment is made will then be forced to run at the reduced output level EPA data suggests in order to accommodate shifts to NGCCs and RE sources contemplated by Building Blocks 2 and 3. The commenters stated that it defies both fundamental economics and common sense to require utilities to make significant capital investments to improve heat

- rate effic iency only to nullify the benefits accrued by forcing the displacement or closure of those same coal

- fired units through a mandatory shift to NGCCs.

Commenters stated that forcing the premature closure of power plants that have years

- and in
many cases, decades

- of remaining useful life creates significant costs to utilities that will be borne by consumers and the economy.

Commenters stated that the Proposed Rule threatens to substantially raise electric rates in Montana. The commenters stated that comp liance costs will increase the cost of providing electric service, which costs will in turn be passed on to residents and businesses (including LCG's members) in Montana in the form of higher rates (both retail and wholesale). The commenters stated that Mo ntana residents and businesses may also simultaneously be saddled with financial responsibility for assets that are stranded as a result of premature retirement, even when these assets still have remaining useful lives and value. The commenters stated that the Proposed Rule raises significant electric reliability concerns. The commenters stated that the Proposed Rule incorporates generic and unsupported expectations of levels of integrated renewable generation and EE that, when applied to Montana, are extre mely ambitious, almost certainly unachievable, and uneconomic under traditional standards.295 Commenters stated that in 2013 the Neal 4 plant underwent a substantial environmental project of which Bancroft's share was approximately $850,000. The commenters stated that if the use of the Neal 4 unit is decreased to comply with the proposed plan addit ional resources will need to be added to replace it. The commenters stated that the stranded cost of the environmental upgrade and the cost of new resources places a great risk on the 732 residents of Bancroft.

Commenters stated that if, as the EPA' s IPM model indicates, the State of Louisiana will likely find its best compliance option to be to direct the retirement of RPS

- 2, Lafayette Utilities System (LUS) would be required to replace more than 50% of its generating capacity and more than 63% of its en ergy requirements with other generation alternatives. The commenters further statedthat this would take new legislation, as neither LUS nor the municipalities that comprise the Louisiana Energy and Power Authority ("LEP A"), are subject to Louisiana Public Service Commission ("LPSC") regulation, and this requirement would have a crushing impact on a relatively small municipally

- owned utility (and its customers, not shareholders) which has very recently invested over $70 million for MATS compliance measures at RPS

- 2. The commenters noted that the analysis and financing for this project assumed planning for the unit until 2032. The commenters described in a table (titled: "Projected Rodemacher Environmental Compliance Costs") that the estimates for replacing R PS

- 2 with a similar amount of combined cycle capacity will result in a $738 million (20 year net present value (NPV)) increase in electricity costs, resulting in an average cost increase of 36.5 mills/kWh (an approximate increase of 43% for both residentia l and commercial customers). The commenters assumed that average monthly residential usage of 1266 kWh (estimate based on 2012

- 2013 actual residential billings) continues, this would increase the average LUS residential utility bill by over $550 per year, or more than 1 % of the average Lafayette area family's annual income, a very significant amount to the nearly 17% of Lafayette's population living below the poverty level. The commenters added that all of this additional cost will be incurred on in additi on to the LUS rate increase already required to support LUS' 50% share of the nearly $140 million recently expended for MATS compliance projects. The commenters stated that the LUS' economic models project that replacement of RPS

- 2 energy with generation f rom existing resources would be even more expensive due to: a) the need for investor

- owned utilities, which now own nearly all of the NGCC capacity in Louisiana, to make a profit on their investments; and b) anticipated NAAQS compliance costs in the early 2020s. Furthermore, the commenters stated that as pointed out by the Louisiana Department of Environmental Quality ("LDEQ") in comments filed on September 14, 2014, the amount of existing NGCC capacity available has been significantly over

- estimated by the EPA. Therefore, the commenters noted, the cost of securing existing capacity is expected to be even more expensive, driving LUS even more strongly toward replacing RPS

- 2 if emission reduction requirements are not reduced to reflect the reality of the stat e's situation.

Commenters stated that EPA focuses only on whether EGUs may be required to make substantial capital investments late in the useful life of an EGU and fails to recognize that many owners made prior investment decisions based on expected futu re operations. The commenters remarked that PPL Energy Supply's plants in Pennsylvania and Montana, and others like them operating in competitive power markets, are not nearing the end of their useful lives. The commenters stated that EPA's proposal, if im plemented, could result in premature plant shut downs, translating into millions of dollars of sunk costs, and the forced retirement of coal

- fired units will have particularly severe consequences for merchant generators like PPL Energy Supply. The
commente rs contended that because coal

- fired assets would have very little salvage value, forced296 retirement of coal

- fired generation could well mean bankruptcy and dissolution for many merchant plants, generating companies and ancillary services.

Commenters state d that all the nuclear, wind, and solar capacity calculations assume that, by 2020, coal

- fired energy production in Virginia is reduced by two

- thirds from 2012 levels. The commenters stated that maintaining coal

- fired generation in Virginia that is greater than one

third of 2012 levels

- including production from plants with significant investments which if retired would result in stranded costs to Virginia residents and businesses

- would require even

more new zero

- carbon generation. The commenters stated that from 2005 to 2012, carbon emissions from Virginia generation facilities were reduced by approximately 40%. The commenters stated that nuclear uprates, heat rate improvements, unit retirements, energy efficiency, and the addition of significant new nat ural gas facilities, have significantly lowered carbon emissions in the Commonwealth. The commenters stated that the EPA's goal of providing States with flexibility to minimize stranded costs directly conflicts with carbon emission rates that, for Virginia , are set so low that compliance options are extremely limited. The commenters stated that a more aggressive displacement of existing resources will increase stranded costs, which is almost certain to contribute to increased, not decreased, electricity pri ces in regulated States. The commenters stated that Virginia ratepayers served by Appalachian Power Company, whose generation facilities are located primarily in West Virginia, face stranded costs associated with the carbon emission rates that the EPA prop oses for West Virginia. Virginia and West Virginia ratepayers have only recently begun paying for more than $2 billion in environmental controls necessary for Appalachian Power Company to comply with a 2007 EPA Consent Decree.

Commenters stated that becau se the proposal would likely result in the premature closure of existing power plants, the proposal's requirements amount to a regulatory taking requiring compensation because of the uneconomic curtailment it will require.

Commenters stated that the propo sed rule threatens to substantially raise electric rates throughout the country as compliance costs will increase the cost of providing electric service, which will in turn be passed on to residents and businesses in the form of higher rates. The commenter s stated that not only will consumers be at risk of funding new investment required by the proposed rule, but residents and businesses may also be financially responsible for assets that are stranded as a result of premature retirement, even when these ass ets still have remaining useful lives. The commenters stated that the proposed rule places at risk several billions of dollars of investments in existing coal fired facilities (including coal leases) that state ratepayers have funded and have only partiall y paid off.

Commenters estimated costs associated with using all four of the Building Blocks. The commenters noted that delivered electricity prices would increase by about 12% on average over 2017 through 2031. The commenters added that there are other f actors that could add to impacts and costs:

• Potential infrastructure costs related to natural gas pipelines, electricity transmission, and voltage support or ancillary services297 • Low projected capacity utilization of non

- retired coal units would lead to de creases in efficiency (i.e., increases in heat rates)

• additional wear and tear costs from operating coal units in a cycling mode, and potentially

• additional retirements, none of which are included in our modeling

• Costs related to unit ramp rate constraint s, minimum load constraints, and delays in new build or retirement permitting

Commenters stated that ratepayers will be forced to pay for the retirement of over 3000 megawatts (MW) of coal production, for new generation sources, and for previously install ed environmental compliance measures for units that will have to be retired.

Commenters noted that EPA has not considered the cost of stranded assets due to investment in generation fleets that will now be retired. According to the commenters, these costs will be reflected in consumers paying for utility investments that will not be used.

Commenters also noted that EPA has failed to consider the costs associated with the remaining useful life of electric generating units that will be retired.

Commenters stated that EPA rules that result in the premature retirement of existing coal plants can lead to higher utility rates via direct replacement power costs and through higher borrowing costs if the retirements have negative impacts on utility credit ratings. The commenters stated that credit ratings can be affected because the need for replacement power will likely lead to higher levels of debt, and/or other fixed obligations, rate increases that public power utilities must implement to recover higher replac ement costs can compound the effects of other factors (e.g., macroeconomics, energy efficiency, net metering and other distributed generation initiatives) that lead to reduced sales and higher rates, and a reduction in fuel diversity (by eliminating coal a s a portfolio option) exposes utilities to greater fuel price risks. The commenters cited a Fitch Outlook report that homogenizing the power generation fleet will leave utilities less able to manage fuel price risks, and in so far as rating agencies believ e an affected utility will be unwilling or unable to pass on the costs of potential price spikes to customers, that utility's credit rating will be downgraded. The commenters stated that new environmental regulation that leads to premature retirement of e xisting coal

- fired resources, or significant increases in the costs to operate these facilities, will translate into higher costs to utility customers through direct expenditures for replacement resources and potentially through higher borrowing costs.

Co mmenters stated that, in addition to the impact on electric rates, these retirements will cause jobs to be lost and will have adverse impacts on local economies and local government tax revenues. The commenters stated that these impacts have already been s een in the local economies of the areas where plants have already been shut down. Commenters stated that closing this much generation in such a short timeframe also raises serious concerns about the ability to maintain reliability and meet peak demand, esp ecially during extreme weather. The298 commenters assume there are still federal requirements that a utility maintain an adequate generation reserve, so reliability is attained.

Commenters stated that because the proposal would likely result in the premature closure of existing power plants, the proposal's requirements amount to a regulatory taking requiring compensation because of the premature closures and uneconomic curtailment it will require. The commenters stated that this is especially true considering that many electric cooperatives, including those in Mississippi, constructed coal fired generating facility in accordance with the Fuel Use Act, in which the federal government required that no new base load electric generating plants be constructed witho ut the capability to use coal.

Commenters stated that with the current Wyoming 2030 emissions reduction goal, the four EPA Building Blocks are unattainable and do not consider the low population in Wyoming, the nature of its power plants, the lack of gas fired power plants within Wyoming and the structure of its renewable energy industry. The commenters stated that if Wyoming could successfully negotiate with the EPA to reduce its 2030 emissions goal to a more attainable level, Wyoming may be able to achie ve plan compliance though the implementation of the EPA Building Blocks, however, without a substantial reduction in the EPA emissions goal, Wyoming may be forced to close many of its coal fired power plants which would be devastating to national, state an d local economies.

Response 6 : Commenters attributed a reduction in taxes and an increase in the cost of government assistance for feeding families to plant closures . Commenter s stated that co

- located mines might also be forced to close. Commenters state d that c losures may result in lower property values and other impacts on a local area that loses a substantial part of its workers. Commenters asserted that plant c losures in an area of deep poverty might increase that poverty. Commenters cited cases of stranded capital with a special focus on stranded capital for pollution control. Commenters expressed the opinion that some of the resulting closures might be considered a “regulatory taking” requiring compensation from the government.

The RIA for the Fin al Clean Power Plan presents in Chapter 3 information regarding potential plant retirements. The RIA estimates that relative to the base case between 23 and 29 GW of additional coal

- fired capacity is projected to be uneconomic to maintain by 2015, increas ing to between 27 and 38 GW in 2030. This is approximately between 11 and 19 percent of all coal

fired capacity projected to be in service in the base case. However, coal will continue to be a very relevant fuel source for the generation of electricity in the US. In 2030, the EPA estimates that about 28 percent of electricity generation domestically will continue to be provided by coal

fired power plants under the illustrative control scenarios modeled by EPA. While coal use in electricity generation is e stimated to decrease as a result of the emiss i on guidelines, other goods and services may see expansions (e.g., energy efficiency industries and renewable generation). The RIA for the CPP presents illustrative strategies that states may consider when deve loping plans. Because the States can choose how to comply with the rule, they might choose to avoid requirements that result in particular closures and related economic impacts.

Regarding stranded assets assertions by commenters, see section 5.11 of thi s respo nse to
comments document for EPA’s response to this comment

. The EPA has included a number of conditions to help ensure that vulnerable communities will not be disproportionately impacted by299 this rulemaking. These considerations are outlined in sec tion IX of the preamble of the final rulemaking. See comment 9 of section 8.6 of this response to comment s document for EPA’s response to comments involving environmental justic e

. The EPA’s response to commenters’ hypothetical regulatory takings claim is a ddressed in the Legal Memorandum accompanying the final rule

.

Comment 7 : Plant closures will have negative tax revenue impacts on governmental units.

Commenters estimated that roughly 6% of its members will lose their jobs if the Clean Power Plan is finalized in its current form. The commenters stated that local power plants provide jobs for hundreds, and often times, thousands of workers. The commenter s stated that the CPP will influence the cost of electricity for residents and businesses, impacting regional growth, employment, taxes, and wages. The commenters predicted that more than 500 coal

- fired power plants will be shut down, and 41GW

- 49GW of coal

- based electric generating capacity would be closed by 2020.

Commenters stated that should the EPA's Existing

- Source Proposal be finalized, Seminole's coal

- fired power plant will be forced to close

- leaving 300 skilled employees and as many as 600 contra ctors without a job. The commenters stated that Seminole is also the largest taxpayer in Putnam County, and paid more than $5 million in property taxes in both 2013 and 2014. The commenters stated that Putnam County cannot afford to lose Seminole's coal

- fi red power plant or any of the jobs associated with the facility.

Commenters stated that the CPP would have the effect of significantly reducing power generation from coal

- fired EGUs, which would immediately threaten the supply of power available for distr ibution to consumers and force the retirement of hundreds of power plants. The commenters stated that hundreds of thousands of coal miners and supporting employees would face layoffs due to the decrease in coal demand. The commenters stated that due to the significance and size of the coal industry, enactment of the CPP would push the national economy along a similar trajectory as the coal industry itself. The commenters stated that by 2030, some 114 GW of existing capacity will be removed from the grid due to closures of coal

fired EGUs

. The commenters stated that the Plan is projected to result in a peak loss of 442,000 jobs occurring in 2022, amounting to a decline of nearly $104 billion to the US GDP. The commenters stated that most analysts predict tha t the cost of electricity will increase significantly, amounting to an aggregate increase of nearly $300 billion by 2030. The commenters stated that in cases of power shortages, which are a distinct possibility due to increased reliance on redispatch to NG CC, price spikes in excess of 10 times the average rate are likely

. The commenters stated that costs are particularly significant for lower

- income households, which the CPP is expected to disproportionately impact

.
Commenters stated that EPA did not condu ct a rigorous cost/benefit analysis, and therefore has likely under

- estimated the costs to many states' economies. The commenters stated that the Regulatory Impact Assessment (RIA) did not incorporate the price risk associated with increased reliance on hi storically price

- volatile natural gas. The commenters estimated that state GDP would be reduced by $2 billion with a ten percent increase in the cost of electricity. The300 commenters stated that the final rule should include a "safety net" provision that wou ld allow states that have increased exposure to natural gas price volatility to be able to dispatch their remaining coal

- fueled fleet, if doing so will offset rate impacts that exceed ten percent.

Commenters stated that this proposed rule could place New Mexico's utility ratepayers, employees, businesses, tax base and economy in jeopardy and could harm the wellbeing of New Mexico families and the "public interest" of the State of New Mexico. The com menters stated that the risk to these constituencies easily eclipses and outweighs the health risk that EPA claims New Mexico's citizens may experience associated with improving New Mexico's existing coal fired generation emissions.

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvania, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the total national electric
g eneration as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the state had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stated that West Virginia' s economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to surrounding states. The commenters stated that the wholesale reduction of the coal market, along with the costs associated with implementi ng the Plan, will result in wide

- ranging harm to state and local economies, triggering job loss, shrinking tax bases, a decline in manufacturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwes t Independent System Operator, a regional power grid operator, estimated that its 20

- year discounted compliance cost of the rule will be $55

- $83 billion. The commenters stated that some national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate increases in 43 states, with 14 states facing peak year electricity price increases that could exceed 20%. The commenters cited other estimates that wholesale electricity costs will increase by $274 billion ; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion.

Commenters stated that electricity rates will rise under this rule because using existing sources of electricity is less expens ive than building new sources. The commenters stated that the average cost of electricity from existing coal plants is only $36.4 per mWh compared to new natural gas costing $66.3 per mWh, new wind costing $80 per mWh, and new solar costing $80.3 per mWh. The commenters cited Energy Ventures Analysis, that power and natural gas costs for customers would likely increase by 60 percent in 2020 compared to 2012

-- a cost hike of $284 billion. The commenters cited NERA estimates that, when all four of the building blocks are options for the states, electricity prices would increase by 12 percent on average between 2017 and 2031, and when states' options are limited by their resources, electricity prices would rise by as much as 17 percent. The commenters stated tha t EPA would thus functionally mandate that Americans use less electricity. The commenters cited NERA estimates that, when the consumer share of energy efficiency costs is included, the total costs related to electricity rise. The commenters stated that in the case in which states can use all four building blocks, electricity

- related costs are projected to rise by about $34 billion per year between 2017 and 2031, where states are limited by their resources that figure shoots up to $48 billion per year. The c ommenters stated that Americans' electricity bills could rise by as much as $210 annually because of the proposed rulemaking. The commenters cited Policy Navigation Group that local governments will have to spend more301 money buying electricity to power scho ols, water treatment plants, municipal buildings, and other local government

- provided services; municipal governments' fee revenues will likely decrease, as consumers spend more on electricity and less on goods and services in the local area and therefore do not pay as much in local government fees; and local governments' tax revenues will decline, as consumers spend more on electricity and less money on taxable goods and services. The comment cited the Virginia SCC staff estimate that costs for Dominion Vi rginia Power "would likely be between $5.5 billion and $6.0 billion on a net present value basis, and several billions of dollars of investments in existing coal facilities that were made to satisfy existing rules would be placed at risk.

Response 7 : Comme nters attributed plant closings to a reduction in tax revenues. Commenters stated that a power plant likely to close is the largest tax payer in the county. The RIA for the CPP illustrates potential scenarios that states could use to comply with the CPP. Ultimately, states will make the decisions as to how to comply with the emission guidelines and have the ability to mitigate impacts associated with the guidelines. States may choose to avoid requirements that could result in particular power plant closur es.

Comment 8 : Producers and consumers of coal will be negatively affected by the Clean Power Plan.

Commenters stated that the economic and fiscal impacts of the coal mining industry, the manufacture of activated carbon, and coal

- fired electricity in Texa s are staggering and are at risk if the proposal is not withdrawn, modified, and re

- proposed to reflect the realities of states' electric generation markets and the authority provided to EPA by the Clean Air Act.

Commenters cited a University of Nebraska study that the existing coal industry generates $4.9 billion in economic output annually and provides 22,800 good jobs for our state. The commenters stated that coal use offsets $142 million in taxes annually, and that reduction in this tax revenue would be passed onto our consumers, in addition to the increased energy prices. The commenters stated that rural communities that are already struggling will be further hurt by this rule.

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvania, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the total national electric generation as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the state had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stated that West Virginia's economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to surrounding states. The commenters stated that the wholesale reduction of the coal market, along with the costs associated with implementing the Plan, will result in wide

- ranging harm to st ate and local economies, triggering job loss, shrinking tax bases, a decline in manufacturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwest Independent System Operator, a regional power gri d operator, estimated that its 20

- year discounted compliance cost of the rule will be $55

- $83 billion. The commenters stated that some302 national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate i ncreases in 43 states, with 14 states facing peak year electricity price increases that could exceed 20%. The commenters cited other estimates that wholesale electricity costs will increase by $274 billion; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion.

Commenters stated that the rule would be devastating to the coal and lignite generating and mining industry, the regional economies that these industries support, and the communi ties that depend on the affordable electricity generated by coal

- and lignite

- fired generation. The commenters stated that much of the coal used in power generation in Mississippi and Texas comes from lignite mines located immediately near the plants, allo wing little opportunity to find another market for the lignite fuel. The commenters stated that the proposal would result in stranded costs at coal

- and lignite

- fired power plants across the country, many with recent installations of significant controls and that these stranded costs may be born disproportionately at the regional level, where many communities rely on coal

- and lignite

- fired power plants as their sole economic driver. The commenters stated that Block 2 of the proposal models that all coal g eneration in Mississippi will be shut down, including includes Plant Daniel, which is in the process of installing a $660 million upgrade to reduce emissions by 90%. The commenters stated that these millions of dollars of control improvements will now be s tranded costs.

Commenters stated that the regional inequities developed by this proposed rule would clearly have disparate and deleterious impacts to workers in states with carbon

- intensive energy portfolios.

Commenters stated that EPA estimates suggest significant upheaval in the coal extraction industry with real associated economic costs to the communities dependent on this critical economic activity. The commenters cited NERA projections of a 29 percent decrease in coal generation in 2020 and a 36 per cent decrease by 2029. The commenters stated that this reduced generation contributes to 45 GW of incremental coal plant retirements through 2031 compared to business

- as

- usual, and that coal consumption is expected to decrease approximately 35 percent from business

- as

- usual by 2030.

Commenters stated that coal producing states will be especially hard hit and the EPA is not able to provide the resources or support necessary to help disproportionately impacted regions to attract new investment or diversify their economy to minimize the economic and social impacts of the decline in demand for coal.

Commenters stated that four to five major state infrastructure programs are funded 100% with coal taxes, and if coal production were to be internally or externally reduced, Montana would not be able to replace such funding.

Commenters stated that the economic impact would likely fall disproportionately on the states served by CSX, especially in the Southeast. The commenters stated that because of the high emission

- reduction targets and current reliance on coal

- based electricity, this region will be forced more than other area to abandon and replace current generating capacity well before it would be otherwise retired.303 Commenters stated that in Missouri, more than 8 0 percent of electricity is generated by coal

fired plants, and that moving rapidly and without justification away from coal toward unproven or highly variable energy sources, such as natural gas, solar, and wind, will be incredibly costly and result in mu ch higher utility bills, lost jobs and an electric grid that may not stand up to ongoing energy needs. The commenters stated that the economic burdens of the Proposed Rule thus fall most severely on states like Missouri that rely on coal.

Commenters agree d that Arkansas and the country can do more to increase energy efficiency and weatherize homes and businesses, and that Arkansas can also produce more electricity from natural gas and renewables; however, for the foreseeable future, the commenters opined t hat Arkansas still needs coal for baseload power.

Commenters stated that because of the abundance of, and necessary reliance on, fossil fuel resources in West Virginia, and particularly coal, the rates that WVEUG and WVMA members pay to FirstEnergy and AEP are largely dictated and highly dependent upon the cost that these resources, to include environmental controls and regulations, have on electric generation. The commenters stated that as captive ratepayers in a regulated utility environment, WVEUG and WV MA members therefore have significant concerns over the potential impact that any federal regulations governing carbon emissions may have on retail rates. The commenters stated that experience in WV PSC proceedings demonstrates that aggressive environmenta l regulations such as those proposed by the EPA can have a substantial and deleterious impact on industrial and manufacturing customers, as the cost of compliance with such regulations can be passed through to customers in the form of fuel cost and environ mental surcharges. The commenters stated that this is particularly problematic for WVEUG and WVMA members, as they have had to absorb a barrage of monumental rate increases for electric service in the last several years. The commenters stated that every c ost element that places upward pressure on West Virginia retail electric rates threatens their competitive viability. The commenters stated that they have considerable concerns that these regulations could create an irrevocably damaging retail electricity rate burden for West Virginia industry and manufacturing; in fact, EPA's own estimates portend electric rate increases of as much as 12 percent; on top of the already inflated electric rates of AEP and FirstEnergy in West Virginia, this could only result i n the further degradation of West Virginia's business and industry. The commenters urged the EPA to very carefully weigh the impact that the proposed regulations may have on retail rates in fossil

- fuel dependent states such as West Virginia.

Commenters st ated that the retirements Building Block 2 precipitates would have dramatic local economic impacts. The commenters stated that shutting down the Coronado and Springerville Generating Stations in Apache County, Arizona, would cause over 4,000 individuals t o lose their jobs, nearly 70 percent of which are located in Apache County, and cut $600 million in annual gross state product from Apache County. The commenters stated that with limited alternative employment opportunities, the resulting exodus of plant e mployees would depress County housing values, shutter local businesses, and county services would be curtailed as remaining County residents would be unable to alone shoulder the entire financial burden of supporting communal services, such as schools, med ical centers, library districts, and fire districts. The commenters stated that the RIA only analyzes national employment impacts. The commenters stated that the Proposed Rule must give the states greater discretion in determining the appropriate performan ce standards for affected units.30 4 Commenters stated that the proposal would have tremendous impacts on the communities where Tri

- State owns and operates coal

- fired EGUs if those EGUs are forced to shut down or to curtail their operations severely. The comm enters stated that when indirect impacts of Craig Station are taken into account, the plant is responsible for $489.6 million in regional total output. The commenters stated that Craig Station is responsible for providing three of Moffat County's top
ten e mployers: Tri

- State, the Trapper Mine, and the Colowyo Coal Mine, and that Craig Station supports 100 percent of the employees at the Trapper Mine and the Colowyo Mine. The commenters stated that mining accounts for better than 18 percent of the annual lab or income generated in Moffat County, and Tri

- State accounts for better than 18 percent of the property tax revenue in the county.

Commenters stated that in the face of rising costs and lower revenue, municipal governments in the short

- term must either ra ise taxes and fees to offer the same level of services or reduce their level of services. These services provide citizens with other public goods such as public education, public safety, public recreation, public roads, public health, and others.

Commente rs stated that the State of Arizona and Apache County in particular will be severely detrimentally impacted if both Coronado and Springerville power plants are forced to cease operation. The commenters stated that Coronado and Springerville combined accoun t for 4,009 direct, indirect, and induced jobs in all private non

- farm employment sectors in the State of Arizona (in CY2013), including 2,740 jobs in Apache County alone, and that these jobs alone equate to $713.5 million (2013 $) real GSP, including $230 .2 million (2013 $) RDPI for the State of Arizona in CY2013

. The commenters stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in gross state product, and $170 million real disposable personal income. The commenter s estimated that over half (56%) of Apache County's property tax value could be eliminated, including two

- thirds to three

- quarters of the property value that supports the local school districts, and with limited alternative employment opportunities, the as sociated exodus of plant employees from the region could potentially result in a drop in housing values, shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library districts, fire districts, etc., currently born by the utilities and their employees.

Commenters stated that with 63,896 employees, the combined employment impacts of the coal industry, associated transportation and power generation industries acc ount for 11.3 percent of employment by private industry in West Virginia. The commenters stated that at $6 billion, the combined direct impacts amount to nearly 9 percent of GSP and including the multiplier effect of spending by these industries and househ olds employed by the industry, the impact amounts to $8.8 billion or 12.7 percent of GSP. The commenters stated that taxes paid by the coal industry are estimated at $638 million in 2012, including property taxes, severance taxes, workers' compensation, ne t income, and personal income taxes paid by industry employees and others

. Commenters cited research at the University of Nebraska

- Lincoln that coal as a generating resource for electricity, combined with its transportation, primarily by rail, generates ab out $4.9 billion in output, including $1.4 billion in labor income, and more than 22,800 jobs for the state.

Commenters discussed the potential for job losses as a result of the rule. Commenters stated that EPA failed to meaningfully consider employment i mpacts of Clean Air Act regulations by not305 using whole economy modeling that would have captured a much more accurate picture of the likely job losses from this proposal. The commenters further stated that EPA failed to undertake an employment analysis und er Section 321A of the Clean Air Act, which requires the continuous review of potential job losses and shifts in employment due to the implementation of the act. Commenters stated that the onslaught of overregulation and lack of certainty in the coal indus try has contributed to the loss of 7,000 coal jobs since President Obama took office as opposed to the increase in 3,500 coal jobs that occurred in the previous administration according to EIA and Kentucky Energy and Environment Cabinet. Commenters stated that the proposed rule will lead to the closure of coal

- burning power plants and the loss of more than 52,000 jobs in the coal, utility and railroad industries by 2020, and an additional 65,000 job losses by 2030. Commenters further stated that the propose d rule will lead to direct and indirect employment losses of over 208,000 jobs by 2030. Commenters urged the EPA to withdraw its proposal for new emissions regulations on the basis of the direct job losses in the coal industry, the indirect economic impact s to communities as a result of coal industry overregulation, and the lack of overall environmental benefit. The commenters cited EPA's emission reductions assessments and stated that the proposal will result in a meaningless 1 percent reduction in atmosph eric CO2 concentrations, an insignificant reduction in global average temperature of 0.016 degrees Fahrenheit. The commenters noted that a study will be conducted by DMME and CCER (no abbreviation definition provided) to report on the effect of increased e nergy prices on lower income populations and the negative economic impacts to coal country, including job loss, in order to show how damaging these new regulations are to the economy. Commenters also stated that all of the public forums have been far from coal country, making it prohibitive for those affected to speak to their plight.

Commenters stated that Federal regulations have already forced two plants in his district to close over the last two years. The commenters cited a National Mining Association projection that more than 300 plants would retire nation

- wide due to EPA rules over the next six years. The commenters cited a Heritage Foundation study predicting that the EPA's anti

- coal policies could terminate 600,000 American jobs by 2023 while causi ng economic growth to drop by more than $2 trillion.

Commenters stated that under the proposed guidelines, EPA projects that its proposed Clean Power Plan will increase electricity prices by a nationwide average of 4 percent to 7 percent, will increase na tural

- gas prices by 9 percent to 12 percent, and will cause the retirement of 46,000 megawatts to 49,000 megawatts of coal

- fueled electric

- generating capacity. The commenters stated that the EPA's proposal will have a major impact on energy resources, ele ctric ratepayers, jobs, and the economy of the Midwest region.

Commenters stated that these job losses will have a ripple effect in the communities throughout the coalfields and beyond, where more than 208,000 jobs will be lost by 2030.

Commenters stated that the proposed rule threatens its viability. The commenters stated that EPA's Regulatory Impact Analysis indicates that the rule would cause Appalachian coal production for electric generation to decline from 140 million tons in the 2020 base case to 87

- 91 million tons, versus 246 million tons of coal in 2009. The commenters stated that decreased coal production will result in significant job dislocations, income losses, and diminished tax bases. The commenters stated that each coal job has a 5 to 1 mu ltiplier effect on the mine services,306 consumable supplies, and the local communities where the mines and mine employees spend the revenues and household income generated from coal sales. The commenters stated that the proposed re

- dispatching of coal genera tion to natural gas combined

- cycle units, unrealistic energy efficiency goals, and new renewable energy targets would create a cycle of increasing coal fired power plant and mine closures, direct and indirect job losses, and higher electricity prices adver sely impacting manufacturing and other key job

- intensive sectors.

Commenters stated that requiring Minnesota to reduce carbon emissions by 41% by 2030 is cost prohibitive, too aggressive, and will hurt our economy. The commenters stated that this will force the shut down of many coal power plants and result in the loss o f thousands of jobs (including many in his legislative district) and will drive the cost of power up, which will create a burden on all Minnesota families and especially low income families.

Commenters stated that for many coal

- fired plants, reaching thes e extreme goals in such a short period of time will prove either economically unfeasible or physically impossible (or both), thus forcing their premature retirements. The commenters stated that the proposed rule will end up slashing not CO2 emissions, but thousands of good

- paying middle

- class jobs instead. The commenters cited projections of retirement of about 12 percent to 19 percent of all coal

- fired capacity projected to be in service in the base case) by 2020 under the range of scenarios analyzed, and its impact on well over 135,000 stable, well

- paying jobs for middle

- class families that the industry provides. The commenters stated the most obvious consequence of the widespread closure of coal

- fired power plants will be massive job losses. The commenter s stated that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries.

Commenters stated that EPA recognized localized negative impacts of t he proposed rule in its RIA. The commenters stated that the first coal mining jobs to be lost will be those at mines that produce the highest priced coal

- notably, mines in eastern Kentucky and that the impact of this proposal will almost guarantee the b roadening and deepening of the poverty already dominant in eastern Kentucky.

Commenters stated that EPA's analysis of the employment impacts of the Proposed Rule was arbitrary and capricious because EPA only evaluated employment impacts in a few select in dustries. The commenters stated that EPA's partial economy model failed to address impacts in the communities that support coal

- fired electricity generation and on consumers of electricity. The commenters stated that a whole economy model must include emp loyment across a wide range of sectors, sufficient detail at the regional level to identify changes in the regional distribution of output and employment, international trade flows to evaluate how regulations will affect tradable sectors and dynamic analys es to examine adjustments in labor and capital markets in response to regulations over time.

Commenters stated that EPA notes the average delivered coal price is expected to decrease 16 to 17% in 2020 and 18% in 2030, and coal production is predicted to d ecline by 25 to 27% in 2020 and 30 to 32% in 2030. The commenters stated that the goal of this plan is to reduce utilization of coal

- fired EGUs, and this will result in displacement of those in the coal mining industry.307 Commenters stated that the proposed rule will severely impact coal industry members, workers in allied industries such as rail transportation, equipment sales and manufacturing, and the communities where those activities are located. The commenters stated that this regulation will put Color ado citizens at risk for lost jobs and higher electricity costs. The commenters stated that by reducing the U.S. fleet of coal

- fired generating units by more than one

- third by 2020, the regulation will place U. S. consumers at risk of "rolling blackouts" a nd service disruptions.

Commenters stated that 40 percent of all freight railroad cars in America are coal cars, and coal continues to provide the money necessary to expand and maintain our rail infrastructure. The commenters stated that America's railro ads will spend approximately $25 billion in 2014 to maintain and expand infrastructure and hire 14,000 employees.

Commenters stated that 48% of the total national reductions are achieved in only six states: 19% Texas, 8% Florida, 6% Georgia, 5% Pennsylvan ia, 5% Arkansas, and 5% West Virginia. The commenters stated that these states made up approximately 28% of the total national electric generation as of 2012. The commenters stated that a state like West Virginia will be hit disproportionately hard, since the state had 16 coal plants operating in 2012, which generated 96% of the state's electricity. The commenters stated that West Virginia's economy was bolstered by selling this energy: 58% of West Virginia's total 2012 electric generation was exported to

s urrounding states. The commenters stated that the wholesale reduction of the coal market, along with the costs associated with implementing the Plan, will result in wide

- ranging harm to state and local economies, triggering job loss, shrinking tax bases, a decline in manufacturing, and a decline in overall economic competitiveness and social stability. The commenters stated that the Midwest Independent System Operator, a regional power grid operator, estimated that its 20

- year discounted compliance cost of the rule will be $55

- $83 billion. The commenters stated that some national estimates claim the Plan will cost $41

- 73 billion per year to implement, causing double digit electricity rate increases in 43 states, with 14 states facing peak year electricity p rice increases that could exceed 20%. The commenters cited other estimates that wholesale electricity costs will increase by $274 billion; that non

- power natural gas costs will increase by $80 billion; and that replacement power will be needed costing $53 billion.

Commenters stated that the proposed rule represents a reversal of decades of a bipartisan federal policy emphasizing increased use of domestic coal to achieve U.S. energy independence, reduce imported foreign oil, and provide the nation with reli able and affordable electricity. Commenters noted that this administration has favored advanced coal technologies.

Response 8 : Commenters emphasized the contribution coal makes to the econom y of the United States. Commenters expressed concerns about regio nal and state inequities because of the geographic distribution of coal mining. Comments also assert ed a reduction in coal mining will reduce tax revenues from coal mining in affected local governments and some states with major infrastructures totally fun ded by coal tax revenues. Commenters contend that of railroads will be impacted because railroad freight cars are used to transport coal.

Chapter 2 of the RIA shows historically the trend in coal and petroleum electricity generation has been declining ov er the 2002 to 2013 period while natural gas and renewable energy have increased. This trend is in part due to regulatory actions, but is also the result of aging coal units and economic market conditions favoring increased natural gas electricity producti on due to308 falling natural gas prices associated with the increased unconventional production of natural gas domestically. The RIA for the Final Clean Power Plan presents in Chapter 3 information regarding potential plant retirements. The RIA estimates th at relative to the base case between 23 and 29 GW of additional coal

- fired capacity is projected to be uneconomic to maintain by 2015, increasing to between 27 and 38 GW in 2030. This is approximately between 11 and 19 percent of all coal

- fired capacity p rojected to be in service in the base case. However, coal will continue to be a very relevant fuel source for the generation of electricity in the U S. In 2030, EPA estimates that about 28 percent of electricity generation domestically will continue to be provided by coal

- fired power plants under the illustrative control scenarios modeled by EPA. At the same time coal use in electricity generation is estimated to decrease as a result of the emiss i on guidelin es, other goods and services are projected to see expansions (e.g., energy efficiency industries and renewable generation).

The E PA recognizes the impacts that transitioning to a lower carbon intense electric power system will result in related shifts in the economy and possible secondary market impacts are discussed in chapter 5 of the RIA. The EPA recognizes that a coal miner or coal plant worker who loses his or her job is not necessarily going to find a new job in energy efficiency or renewable energy. In response to the transition from coal to natur al gas already underway due to lower natural gas prices, many states are implementing replicable programs to transition their workforces

– by working in public

- private partnerships with their community colleges and businesses

- to secure an economic advant age as they transition to a lower carbon energy mix. In addition the Department of Commerce, Department of Labor, Small Business Administration, and the Appalachian Regional Commission have together created an initiative to issue grants to partnerships of regionally

- driven economic development and workforce development organizations in impacted coal communities. 8 In addition, the Department of the Interior has publically committed in the July 2014 Technical Working Group Agreement to facilitate the developm ent of approximately 26,975,000 MWh of clean energy by December 31, 2035 in the Four Corners area. The EPA expect this commitment to support energy

- sector and other jobs in the region. The EPA recognizes the contribution of power plants and coal mines to t he economies of the Navajo Nation, the Hopi Tribe and surrounding communities in Arizona and New Mexico, as well as many other communities nationwide. The timeframe of the CPP from plan development to plan implementation allows states, utilities and other stakeholders the ability to work together to tailor their plans in the ways that best support their communities, so that they can not only reduce their greenhouse gas emissions, but also ease the transition of their workforces to the low carbon economy.

States will make the ultimate plans as to how the CPP will be implemented by the electricity sector. These final emission guidelines will be implemented by emission sources within each state upon the EPA’s approval of a state plan. The EPA has included a n umber of conditions to help ensure that vulnerable communities will not be disproportionately impacted by this

8 See https://www.whitehouse.gov/the

- press

- office/2015/03/27/fact

- sheet

- partnerships

opportunity

- and

- workforce

- and

- economic

- revitaliz

.309 rulemaking. These considerations are outlined in section IX of the preamble of the final rulemaking.

Comment 9 : Low and middle income individua ls will be more heavily impacted by increased energy prices resulting from the Clean Power Plan.

Commenters stated that EPA's carbon regulations could cause serious harm to the U.S. economy, raising energy prices, and costing jobs. The commenters cited Un ited Mine Workers of America estimates that the rule will result in 187,000 direct and indirect job losses in the utility, rail, and coal industries in 2020, and cumulative wage and benefit losses from these sectors of $208 billion between 2015 and 2035. T he commenters stated that higher energy prices disproportionately harm low

- income and middle

- income families. The commenters cited a Center for Strategic and International Studies (CSIS) analysis that the proposal could result in nationwide costs of up to $32 billion per year; and average electricity rate increases of up to 9.9 percent per year. The commenters cited the Wall Street Journal that the rule is a huge indirect tax and wealth redistribution scheme and that costs will ultimately flow to consumers and businesses.

Commenters stated that based on Arizona

- specific modeling, the State of Arizona and Apache County in particular, will be severely impacted if two coal fired power plants cease operation. The commenters stated that Apache County could lose 2,700 FTE job years employment, just under $600 million in annual gross state product and $170 million real disposable personal income. The commenters cited estimates that 56% of Apache County's property tax value could be eliminated, including two

- thirds to three

- quarters of the property value that supports the local school districts. The commenters stated that with limited alternative employment opportunities, the associated exodus of plant employees from the region could potentially result in a drop in h ousing values, shuttering of local businesses, and closing of schools as the remaining population is left with the full financial burden of schools, medical centers, library districts, fire districts, etc., currently born by the utilities and their employe es.
Commenters stated that low income states will be disproportionately affected by the economic impacts of the proposed rule. Commenters stated that EPA's estimated annual costs of carbon regulation to be between $4.2 billion and $8.8 billion and the est imated six to seven percent increase in electricity prices in 2020 will result in reduced grid reliability, reduced global competitiveness among U.S. businesses, and disproportionate impacts between states, and disproportionate impacts to lower and middle class families.

Commenters stated that low income states will be disproportionately affected by increased electricity costs. The commenters recommended that the proposed rule be revised to equitably share the cost of implementation across states.

Commente rs stated that the proposed rule is predicted to have a particularly severe impact on Northwest Arkansas due to few non

- fossil fuel energy sources being available.

Commenters remarked upon the lack of EPA listening sessions in the 10 states that most heav ily rely on coal for electrical generation. The commenters stated the frustration and decline in310 morale associated with not providing listening sessions in West Virginia to discuss the impacts to their communities and businesses, and noted that, for exampl e, a fabrication and machine manufacturer has seen a significant drop in business with the coal industry. The commenters stated that the proposal would condemn mining families to lives of poverty and despair and make it difficult for companies that rely on electricity to keep businesses afloat.

Commenters stated cost considerations: besides the rate increases already experienced from early adoption actions, the implementation of this initiative will further increase rates. The commenters also stated that i t is imperative to consider the significant job losses in New Mexico due to the reduced use of coal. The commenters noted that this has been detrimental to many, but has had the greatest impact on the Native American population who has historically held th e greatest percentage of jobs at both the coal mines and the power plants. The commenters noted that New Mexico continue to rank among the very poorest states in the nation, and the extreme poverty rates make any electric rate increase detrimental to our c itizens. The commenters opine that these actions will necessarily increase rates. The commenters concluded that the state's economy and New Mexico household costs should not be threatened by substantial increases in electric costs and further job losses.

Commenters stated that new GHG emission requirements will have a large and immediate impact on the job climate across our state, and much of that impact will be felt in my community where a large portion of the economic activity relies on coal

- based energy production. The commenters further stated that Indiana County and the neighboring areas are home to a number of affected EGUs (including Conemaugh Generating Station, Keystone Generating Station, Seward Generating Station, and the Homer City Generating St ation) and that these power plants serve as lynchpins of the local economy, with extensive direct, indirect, and downstream economic impacts. The commenters referred to the Homer City Generating Station, which is located in the middle of the district, as a n example of how important all of these power plants are to the local economy. The commenters noted that in terms of direct employment, this facility employs more than 250 local men and women, and many of these employees are unionized and receive significa nt family

- sustaining benefits packages. The commenters stated that the indirect economic activity generated by the Homer City Generating Station supports the companies that provide services and products for the plant's operations, including coal mines, the coal truck operators, the rail transportation infrastructure that carries coal to the power plant, the scrubber byproduct processing facilities, and a water treatment facility to process the plant's wastewater. The commenters estimated that the nearby Hom er City Coal Cleaning Plant employs 50; the related coal mining operations employ between 350 and 450 individuals; and between 250 and 350 coal truck drivers deliver coal to the power plant. However, the commenters stated that it is the downstream impact t hat best demonstrates the power plant's importance to the community, and the economic ripple effect extends well beyond the hundreds of employees who report to work each day. The commenters estimated that the facility is responsible for the purchase of $39 5 million worth of goods and services every year in the local area, and that figure represents a significant amount of economic activity for any locale, much less in our portion of Western Pennsylvania. The commenters stated that every dollar spent in the community is recycled many times, supporting everything from direct vendors to the power plants and their suppliers to byproduct processing companies to the local restaurants, and that the taxes generated from this economic activity create tax revenue that is critical to municipal governments and school districts. The commenters noted that the ongoing installation of a scrubber system underscores311 the importance of the Homer City Generating Station, with a cost of nearly $750 million, and the project demonst rates a long

- term commitment to the environment, the needs of the power grid, and the local community.

Commenters stated that the state rules that will proceed from these guidelines will be especially difficult for smaller utilities that have fewer option s on where and how to seek power supplies, and costs for compliance will be substantially higher on a per kilowatt hour basis because many of the costs are fixed regardless of how many hours are sold. The commenters stated that the rule fails to take into account the financial impacts of the rule on the general fund levels of municipal governments. The commenters stated that forced reductions in energy consumption to meet energy efficiency requirements of the guidelines can reduce income by $10,000 or more per year, which is extremely important in smaller towns. The commenters stated that municipal governments are going to have to reduce their own consumption by approximately 10% and in most cases this will require substantial investment in new equipment and technology. The commenters stated that because smaller utilities in Missouri, have a higher proportion of ratepayers over age 65 and a higher percentage of people living below the poverty line, the implementation of this rule includes several Environmenta l Justice components. The commenters stated that EPA should create provisions for longer compliance times, and exclude emissions when a local utility serves smaller communities with higher than average or median levels of protected classes.

Commenters sta ted that the proposed rule will result in increased energy costs that will further stymy economic activity and result in additional hardship on our population, especially the 14.7% that are already living below the poverty level. The commenters stated that its county unemployment hovers around 10% annually and the loss of this plant would be devastating. The commenters stated that a large

- scale retirement of coal

- fired plants across the country would result in massive job losses, tax base loss, increased en ergy costs.

Commenters stated that the EPA's proposal will have a disproportionately greater impact on lower

- income and middle

- income families. Commenters sponsored an extensive analysis of an NRDC proposal which served as a blueprint for EPA's proposal a nd projected, among other impacts, double

- digit electricity price increases in most states and substantial increases in natural gas prices nationwide. The commenters also noted that states with carbon constraints are already experiencing significantly high er electricity prices, including 17 and 52 percent higher electricity prices in California and New England, respectively than the national average. The commenters stated that this will have a greater impact on lower

- income and middle

- income families becaus e it represents a large portion of their budget.

Commenters stated that members of the local community cannot afford higher energy prices, that the members pay a disproportionately high percentage of their income for energy, and that energy bills the can r epresent up to 71 percent of family incomes prior to energy assistance programs. The commenters stated that increased costs will slow economic growth, reduce job opportunities, and force families to make tough budget decisions.

Commenters stated that the domestic coal

- based electric power industry will have invested $145 billion through 2016 to achieve these emission reductions; and the U.S. electric sector emits four percent of global greenhouse gas emissions and, as a consequen ce, unilateral actions by the U.S.312 will not have a meaningful effect on climate change; and policies to reduce CO2 emissions are likely to increase energy costs; and increases in energy costs have a disproportionately greater impact on minority families, f ixed and low

- income consumers and minority owned businesses. The commenters then urged EPA and the Administration to ensure that its guidelines and other policies to reduce greenhouse gas emissions minimize costs, do not cause employment losses, support ad vancements in fossil fuel technologies such as carbon capture and storage, and do not cause increases in energy prices that will harm low

- income electric consumers, minority families and minority businesses.

Commenters stated that the proposed rule will i ncrease energy costs and reduce the diversity of our nation's electricity supply and impede the nation's economic recovery and stifle future growth. The commenters stated that EPA estimates annual compliance costs between $5.4 and $7.4 billion in 2020, hit ting $8.8 billion in 2030; but these numbers include only future power sector compliance costs, failing to capture the residual impacts of higher electricity rates on overall economic activity. Citing a recent Wall Street Journal editorial and an HIS study , the commenters stated that raising the price of carbon energy will also raise costs across the economy, which will ultimately flow to consumers and businesses resulting in slower economic growth, job losses, and less disposable income. The commenters sta ted that the IHS estimates that the rule will result in an additional $289 billion in cumulative electricity payments by consumers from 2014 through 2030; a loss of 224,000 jobs on average through 2030; more than $50 billion in average annual GDP loss thro ugh 2030, with a peak GDP loss of nearly $104 billion in 2025; and from 2014 through 2030, a cumulative reduction of $586 billion in disposable income. The commenters stated that families will have less disposable income as they spend more to light and hea t their homes, with middle

- income and lower

- income Americans being hit the hardest. According to the commenters, in 2001, lower

- income households spent 16 percent of their after

- tax income on energy and in 2014, these households will spend 26 percent of th eir budgets on energy (before taking into account any energy assistance programs). The commenters stated that lower

- income families are especially vulnerable because energy costs represent a larger portion of their budgets and reduce the amount of income t hey can spend on food, housing, health care, and other necessities.

Commenters stated that vulnerable low

- income citizens will bear the brunt of increased electricity costs. The commenters stated that expenditures are required to benefit from energy effic iency. The commenters stated that energy

- intensive industries are sensitive to even moderate electricity price increases. The commenters stated that Kentucky's eastern coal region is suffering already, and they will experience even greater loss of employm ent and production as other states take action to comply with the proposed rule.

Commenters stated that the Proposal will result in increases in electricity prices that are likely to be substantial in a number of states, on top of steadily increasing pric es to consumers that are projected by the federal government to continue upward even without the implementation of this Proposal. The commenters stated that these increases will be exacerbated in some regions due to the structure and operations of the RTO

- administered wholesale markets, and they will have a disproportionate adverse impact on low

- and fixed

- income consumers.

Commenters cited consumer advocacy groups that electricity prices and increases in prices have a disproportionate impact on low and fi xed income consumers. The commenters stated that low

-313 income households in the Northeast that heat with electricity pay 12.9 to 17.2 percent of their income for energy.

Commenters stated that the level of renewable energy assumed by the EPA's Building Blo ck 3 goal cannot be achieved. The commenters stated that significant levels of increased renewable energy will have a serious effect on electric rates and that low income customers will be particularly hard hit. The commenters stated that industrial rates could also be disproportionately impacted because of the higher load factors that most industrial customers have.

Commenters stated that the Proposed Rule will result in significantly higher electricity prices. The commenters stated that electricity pric es will have immediate impacts on businesses that rely on affordable energy to sustain hiring and production levels and high electricity prices will also hit low

- income Americans particularly hard, given the high percentage of their monthly budgets that th ey devote to basic needs such as heating and cooling. The commenters stated that the proposed rule would force low

- cost coal to be abandoned in favor of other, more expensive and less reliable energy sources. The commenters stated that this burden will fa ll especially hard on low

- income Americans who already devote substantial portions of their income on the electricity necessary for the basics like heating and cooling, and cited a study by the Affordable Power Alliance that found that the type of CO2 rest rictions implied in the EPA regulation would have serious economic, employment, and energy market impacts at the national level and for all states, but that the impacts on low

- income groups, the elderly, African Americans, and Hispanics would be especially severe. The commenters stated that because rural electric cooperatives are heavily coal

- dependent, the Proposed Rule will have an especially severe impact on rural poverty. The commenters stated that EPA's current approach ignores any analysis of energy a ffordability and reliability, and is insensitive to the needs of those most affected by the exorbitant costs.

Commenters stated that as much as 30 to 40 percent of the population in some counties of its service territory live in manufactured housing

- whi ch is the most energy inefficient housing a person can own. The commenters stated that the burden of rate increases of 20% or more will fall on those that can least afford it.

Commenters stated that this rule could result in significant economic impacts t o residential and commercial customers, particularly minorities, elderly and economically disadvantaged customers. The commenters stated that the Big Bend Station coal plant is a critical part of the Tampa Bay economy with good jobs and is a critical part of Tampa Bay ecology with warm water discharge serving as a winter refuge for manatees.

Commenters stated that by proposing to rely heavily on natural gas for carbon emission reductions, the EPA also fails to account for the disparate impacts of rising na tural gas prices on low

- income households. The commenters stated that EPA should avoid strategies for avoiding climate disruption that would perpetuate disproportionate adverse environmental justice impacts.

Commenters stated that the proposed rule will c ause those in low income socioeconomic brackets to lose heat and power because they will not be able to pay for the rising utility costs. The commenters also stated concern that U.S. businesses will be unable to compete in a global economy due to the highe r electricity rates, and that worldwide greenhouse gas emissions may314 actually increase due to the relocation of manufacturing operations from the U.S. to other countries with less restrictive regulations.

Commenters cited NERA that electricity prices woul d increase by 12 percent per year and the total costs of the rule could be between $366 billion to $4 79 billion over a 15 year timeframe. The commenters stated that higher energy prices disproportionately harm low

income and middle

- income families.

Comme nters stated that the center of California's energy policy has been to virtually eliminate coal, which required a move to natural gas as the State's primary source of power. The commenters stated that California's industrial electric prices were 65 percent higher than the national average. The commenters stated that in 2013, California residents and business paid 35 percent and 32 percent higher rates respectively, with industrial rates 67 percent above and overall rates 45 percent above average. The commen ters stated that in 2013, a company based in Missouri would have spent 82 percent more on electricity if it was based in California. The commenters stated that sharply increasing electricity rates will severely threaten Missouri's low

and fixed

- income res idents. The commenters stated that approximately 16 percent of Missourians fall below the poverty line, and in rural Missouri, the poverty rate is 18 percent.

Commenters cited an American Coalition for Clean Coal Energy sponsored projection of double digi t electricity price increases in most states and substantial increases in natural gas prices nationwide. The commenters stated that the proposed rule would force changes from cost

effective coal to natural gas and intermittent renewables, which would incre ase the cost of electricity. The commenters stated that higher energy prices disproportionately harm low

- income and middle

- income families as well as rural economies that are more energy

- intensive such as Western South Dakota.

Commenters stated that South Carolina electric cooperative members are heavily impacted by poverty that nearly 20 percent of the families it serves make less than $25,000 annually, and in some months many spend as much as 80 percent of their income on energy costs. The
commenters sta ted that the cost increases resulting from South Carolina's attempts to comply with the Clean Power Plan stand to significantly impact the financial well

- being of the communities it serves and that such increases would not only disproportionately affect So uth Carolina cooperative members, but since electric cooperatives are owned by the people they serve, those same people must directly bear the costs of any resulting increases in the cost of electricity.

Commenters stated that by significantly restricting the use of the remaining life of existing power generating units, the proposed rule will increase electricity prices for American households and since low

- income families spend a larger proportion of their income on energy, a tax that increases energy pri ces would disproportionately affect the budgets of the poorest American families.

Commenters stated that New Orleans' vulnerability to the impacts of climate change, and issues such as storm severity and sea level rise are of great concern as is the impact of increasing electricity costs on New Orleans citizens. The commenters stated that approximately 27% of persons in New Orleans are below the federal poverty level and even relatively small increases in315 rates for electricity can cause significant difficul ty for vulnerable populations. The commenters stated that the Energy Smart energy efficiency and conservation program was established in 2011, and in its first three years, has estimated to have served 8,714 customers, saved 16,007,993 kWh of electricity a nd reduced CO2 emissions by 89,644,761 pounds. The commenters stated that it is considering utility

- scale renewable resources as part of the utilities' integrated resource plan process and as with energy efficiency, it has pursued these programs to ensure a cleaner energy future for its ratepayers in a cost

- effective manner.

Commenters stated that South Carolina has 12 persistent poverty counties (26 percent of the state's total), defined as counties with a poverty rate of 20 percent or higher in each cens us from 1970

- 2010, and that electric cooperatives serve in all 12 persistent poverty counties in the state, where, in some cases, the median household incomes are 43 percent less than the national average. The commenters stated that 17 percent of electric cooperative members, more than 200,000 people, live below the established Federal Poverty Level ($23,850 for a family of four). The commenters stated that this is 2 percent higher than the national average. The commenters stated that 23 percent of South Ca rolina's electric co

- op members, more than 254,000 people, live beneath 125 percent of the established Federal Poverty Level ($29,813 for a family of four) which is three percent higher than the national average. The commenters stated that South Carolina r esidents above age 65 are especially vulnerable to rising costs for nondiscretionary goods and services, and that more than 40,000 households (36 percent) headed by a co

- op member over the age of 65 have an annual household income less than dollar 25,000. The commenters stated that 24 percent of electric cooperative homes in South Carolina are manufactured housing, and that mobile homes represent 17 percent of the state's housing stock, which is almost 3 times the national average. The commenters stated tha t more than two

- thirds of South Carolina's co

- op members (68 percent) use electricity as a primary heating source, and that in the state's persistent poverty counties, this number rises to 73 percent. The commenters stated many of its members cannot afford the additional economic challenges that may result if all provisions of rule III (d) are enacted.

Commenters stated that its grassroots members have clearly enunciated a strong opposition to regulation of greenhouse gas emissions. The commenters stated t hat imposing added energy costs on our own economy while other economies are not held to the same standard not only puts Kansas and consumers at a disadvantage, it serves little environmental purpose. The commenters cited the National Association of Manufa cturers that the Proposed Standard could cost Kansas $13 billion gross state product loss from 2017 to 2040, 14,474 lost jobs or job equivalents per year, $1,000 drop in household consumption per year, up to a 15 percent increase in household electricity p rices (national average) and up to a 32 percent increase in household natural gas prices (national average). The commenters stated that the 550,000 low

- income and middle

income families in Kansas

- 50 percent of the state's households

- spend 19 percent of their after

tax income on energy

. The commenters stated that 29 percent of Kansas households receive Social Security. The commenters stated that lower income families and Social Security recipients are especially vulnerable to further increases in energy costs

. Commenters stated that the proposed rule will create a burden on our low income and fixed income customers due to the increased cost of power and will possibly reduce the City's ability to attract industrial and commercial type growth, due to higher energy rates, there by inhibiting the ability of low and moderate income customers to find better paying jobs to pay their higher316 utility bills. The commenters stated that fixed income and low or moderate income customers may not be able to take advantage of utility offered incentives to purchase more efficient appliances or make energy improvements to their homes, and will be forced to pay higher energy costs while still operating less efficient appliances and living in less energy efficient housing.

Com menters stated that the impact of re

- dispatch of coal fired generation to combined cycle natural gas (building block 2) has the potential to cost ratepayers hundreds of millions per year due to the higher cost of natural gas as compared to coal. The commen ters stated that the investment in heat rate betterment programs at coal fired generation units will cost hundreds of millions, the construction of, and transmission of renewable energy sources to displace emission from coal fired generators has the potent ial to be in the billions by 2030 depending upon the final regulations, and efficiency improvements at commercial, industrial and residential facilities will run in the hundreds of millions. The commenters stated that in Owensboro, Kentucky 25.4% of the re sidents of the city, and ratepayers of OMU, live at or below the poverty line

. The commenters stated that EPA must recognize that electric rates must be affordable in our communities, including to those who least can afford them. The commenters stated that EPA has failed to adequately determine the true cost of implementation of the proposed regulations and that failure is at the expense of the most vulnerable ratepayers. The commenters stated that EPA's social cost analysis in the RIA fails to address the real potential of increased mortality and adverse health impacts associated with moving ratepayers into or further into poverty.

Commenters stated that the expectation that it can somehow force its customers to use electricity efficiently per block 4 is no t realistic. The commenters stated that these regulations will make electricity so expensive that our low

- income ratepayers will be forced to cut electrical consumption to maintain the most basic necessities.

Commenters stated that there needs to be a gre ater focus on the options besides electric rates to pay for the transition to other types of energy production, as well as ways to recover the billions of dollars in stranded capital costs such a transition would require. The commenters stated that if

we a re going to pay for the transition away from coal generation in the electric sector primarily through electric rates, the impact would be extremely regressive, with the burden falling most heavily on low and moderate income Minnesotans and those on fixed i ncomes. The commenters stated that if the transition depends on greater use of individually

- owned distributed generation, we need to make sure that other energy policies don't leave the people who can't afford their own solar array or investments in conser vation carrying more and more of the cost of the grid.

Commenters stated that in Tennessee, 24.1% of homeowners and 42.6% of renters live in unaffordable housing and 20% of working families are severely housing cost burdened, meaning that they spend 50% o f their income on housing. The commenters stated that for a homeowner, housing costs includes mortgage, utilities, and property taxes; housing costs for a renter are rent and utilities. The commenters stated that increases and decreases in electricity rate s and costs affect disposable income. The commenters stated that TN will have difficulties ensuring environment justice within its compliance plan without a mandate to do so.

Commenters also stated that EPA did not assess the number of premature deaths th e rule will cause through loss of disposable income to Americans, and stated that Texans particularly are at risk. The commenters said a 15% increase in energy cost due to the proposed rule will place the317 population in Texas in dire straits. The commenters said that 700,000 families spend nearly three

- quarters of their income on energy, and that 49% of Texas's families have gross annual incomes of $50,000 or less, with an average after

- tax income of $23,756, or less than $2,000 per month. The commenters al so stated that about 700,000 families in Texas live well below the federal poverty line, earning less than $10,000 per year, and are being squeezed hardest by energy cost increases.

Commenters stated that the implications of cost increases in low income p eople will translate to going without food, medical care and prescription drugs. The commenters cited a report by Lutter and Morrall which stated that "regulations to promote health and safety that are exceptionally costly relative to the expected health b enefits may actually worsen health and safety, since compliance reduces other spending, including private spending on health and safety. Past studies relating income and mortality give estimates of the income loss that induces one death

- a value that we c all willingness

- to

- spend (WTS)

- to be around $9 to $12 million ($US 1990)." The commenters also cited EPA's statement: "people's wealth and health status, as measured by mortality, morbidity, and other metrics, are positively correlated. Hence, those who bear a regulation's compliance costs may also suffer a decline in their health status, and if the costs are large enough, these increased risks might be greater than the direct risk

- reduction benefits of the regulation." The commenters stated that NEADA 20 08 National Energy Assistance Survey found similar results in where increased energy costs resulted in more sickness.

Commenters stated that the impacts and costs of climate change to our states are very real. The commenters cited a 2009 study that showed that climate change would cost Oregon a minimum of $3.3 billion annually by 2020, $5.1 billion by 2040 and $9.8 billion by 2080. The commenters noted that these are costs incurred due to increased flood and storm damage, reduced food production, increased wildfires, and health impacts (e.g., more respiratory disease such as asthma). Similarly, the commenters stated that the impacts of climate change would cost Washington's economy $3.8 billion by 2020, $6.5 billion by 2040 and $12.9 billion by 2080. The

co mmenters also cited the Oregon Health Authority that recently released the Oregon Climate and Health Profile Report, and this report impressively details the wide variety of ways climate change will impact the health and safety of Oregonians, from deterior ating air quality, increased wildfires and heat waves, and increased allergens and diseases.

Commenters cited a 60 Plus report estimating that current and pending EPA regulations could increase electricity rates above the general inflation rate by as much as 20% and that future energy prices, due to market trends and current and pending EPA regulations, will likely outpace household income among the 63% of America's 65+ households with gross annual incomes under $50,000.

Commenters stated that the per

- kil owatt cost of energy would increase 11%

- 17% annually and that consumers' total increased energy cost would be $366 billion to $479 billion, or $34 billion (8%) to $48 billion (11%) annually. The commenters stated that these increases would particularly bu rden more vulnerable populations, such as low

- income seniors who are on fixed budgets.318 Commenters stated that future energy price increases, driven in large measure by petroleum supply and demand trends and by current and pending U.S. EPA regulations, are likely to outstrip real household incomes among the 63% of America's 65+ households wit h gross annual incomes less than $50,000. The commenters cited NERA analyses that the proposed Clean Power Plan will cause potential delivered electric price increases averaging 12% to 17% over the period 2017 to 2031, depending upon the degree of implem entation flexibility, and that total consumer energy costs could rise by $366 to $479 billion in net present value. The commenters cited projections by the Center for Strategic and International Studies (CSIS) and the Rhodium Group that national electric prices could increase by 5.4% to 9.9% due to the Clean Power rule.

Commenters stated that any increase in the price of electricity or natural gas is harmful to the seniors. The commenters stated that seniors on fixed or diminishing incomes pay a dispropor tionate share of their modest income for utilities. The commenters stated that our nation must preserve and grow the contribution of coal

- based electricity which is the surest and most reliable way to deflate electricity prices.

Commenters stated that unde r the proposed regulation estimates show that electricity rates will increase at least 26%. The commenters stated that this would be a serious hardship to our senior citizens who may have to choose between meals, medication or electricity.

Commenters stat ed that many fixed income seniors are limited to cost

- of

- living increases that do not keep pace with energy prices. The commenters stated that Virginia's senior and lower

- income citizens cannot afford this rule and it produces no benefits worth the cost an d is not authorized under the Clean Air Act.

Commenters discussed the potential for job losses as a result of the rule. Commenters stated that EPA failed to meaningfully consider employment impacts of Clean Air Act regulations by not using whole economy m odeling that would have captured a much more accurate picture of the likely job losses from this proposal. The commenters further stated that EPA failed to undertake an employment analysis under Section 321A of the Clean Air Act, which requires the continu ous review of potential job losses and shifts in employment due to the implementation of the act. Commenters stated that the onslaught of overregulation and lack of certainty in the coal industry has contributed to the loss of 7,000 coal jobs since Preside nt Obama took office as opposed to the increase in 3,500 coal jobs that occurred in the previous administration according to EIA and Kentucky Energy and Environment Cabinet. Commenters stated that the proposed rule will lead to the closure of coal

- burning power plants and the loss of more than 52,000 jobs in the coal, utility and railroad industries by 2020, and an additional 65,000 job losses by 2030. Commenters further stated that the proposed rule will lead to direct and indirect employment losses of ove r 208,000 jobs by 2030. Commenters urged the EPA to withdraw its proposal for new emissions regulations on the basis of the direct job losses in the coal industry, the indirect economic impacts to communities as a result of coal industry overregulation, an d the lack of overall environmental benefit. The commenters cited EPA's emission reductions assessments and stated that the proposal will result in a meaningless 1 percent reduction in atmospheric CO2 concentrations, an insignificant reduction in global av erage temperature of 0.016 degrees Fahrenheit. The commenters noted that a study will be conducted by DMME and CCER (no abbreviation definition provided) to report on the effect of increased energy prices on lower income populations and the negative econom ic impacts to coal country, including job loss, in319 order to show how damaging these new regulations are to the economy. Commenters also stated that all of the public forums have been far from coal country, making it prohibitive for those affected to speak to their plight.

Commenters stated that forcing Minnesota to reduce its carbon emissions by 41% by 2030 is not fair, as midwestern states do not have to reduce by such a high percentage. The commenters stated that this will force the shutdown of many coal power plants, eliminate thousands of jobs in Minnesota, drive the cost of power up and create a terrible burden on lower income families. The commenters stated that it would like to see No. 3 generating plant stay online to keep some of the support and jo bs in Becker, MN.

Commenters stated that requiring Minnesota to reduce carbon emissions by 41% by 2030 is cost prohibitive, too aggressive, and will hurt our economy. The commenters stated that this will force the shut down of many coal power plants and r esult in the loss of thousands of jobs (including many in his legislative district) and will drive the cost of power up, which will create a burden on all Minnesota families and especially low income families.

Commenters stated that for many coal

- fired pl ants, reaching these extreme goals in such a short period of time will prove either economically unfeasible or physically impossible (or both), thus forcing their premature retirements. The commenters stated that the proposed rule will end up slashing not CO2 emissions, but thousands of good

- paying middle

- class jobs instead. The commenters cited projections of retirement of about 12 percent to 19 percent of all coal

- fired capacity projected to be in service in the base case) by 2020 under the range of scena rios analyzed, and its impact on well over 135,000 stable, well

- paying jobs for middle

- class families that the industry provides. The commenters stated the most obvious consequence of the widespread closure of coal

- fired power plants will be massive job lo sses. The commenters stated that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries.

Commenters stated that EPA recognized localized ne gative impacts of the proposed rule in its RIA. The commenters stated that the first coal mining jobs to be lost will be those at mines that produce the highest priced coal

- notably, mines in eastern Kentucky and that the impact of this proposal will alm ost guarantee the broadening and deepening of the poverty already dominant in eastern Kentucky.

Commenters cited the United Mine Workers of America prediction that there will be 75,000 direct coal generation jobs lost by 2020 and 152,000 by 2030. The com menters cited the International Brotherhood of Electrical Workers that the agency's plans also would result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail and at least another 100,000 jobs in related industries, and that hig h

- skill, middle

- class jobs would be lost, falling heavily in rural communities that have few comparable employment opportunities. The commenters cited the US Chamber of Commerce projections that there will be 224,000 jobs lost on average each year through 2030, and the rule will result in a loss of $50 billion in GDP on average. The commenters cited Dr. Gabriel Calzada Alvarez, who examined the impact of renewable energy policies in Spain, found that 2.2 jobs were lost for every one job created.320 Commenters stated that the primary concern of the IUOE is that the regulation could cause job loss for its members, eliminating high

- quality, family

- sustaining jobs, which could affect broader swaths of the economy and drag down overall economic performance.

Commen ters stated that during the period 2001

- 2013, while its energy costs escalated, California lost 650,000 manufacturing jobs

-- approximately one

- third of all California manufacturing jobs.The commenters stated that 34 percent of the nation's welfare recipient s live in California. The commenters stated that California has shown the disastrous consequences of abandoning coal as an energy source and pushing jobs for the working class out of its borders, often to Mexico and other countries. The commenters stated t hat that Missouri is at the crossroads between the South and Midcontinent Independent System Operator power regions, which are expected to incur "over half the U.S. total costs during the 2014

- 30 timeframe," and "will shoulder more of the economic conseque nces of compliance."

Commenters stated that the CPP would have the effect of significantly reducing power generation from coal

- fired EGUs, which would immediately threaten the supply of power available for distribution to consumers and force the retiremen t of hundreds of power plants. The commenters stated that hundreds of thousands of coal miners and supporting employees would face layoffs due to the decrease in coal demand. The commenters stated that due to the significance and size of the coal industry, enactment of the CPP would push the national economy along a similar trajectory as the coal industry itself. The commenters stated that by 2030, some 114 GW of existing capacity will be removed from the grid due to closures of coal

fired EGUs. The comment ers stated that the Plan is projected to result in a peak loss of 442,000 jobs occurring in 2022, amounting to a decline of nearly $104 billion to the US GDP

. The commenters stated that most analysts predict that the cost of electricity will increase signi ficantly, amounting to an aggregate increase of nearly $300 billion by 2030

. The commenters stated that in cases of power shortages, which are a distinct possibility due to increased reliance on redispatch to NGCC, price spikes in excess of 10 times the a verage rate are likely

. The commenters stated that costs are particularly significant for lower

- income households, which the CPP is expected to disproportionately impact

. Commenters stated that in Utah, coal

- fueled electricity is responsible for meeting a pproximately 80% of the state's energy needs, and it is crucial that Utah maintains the economic development competitiveness that coal provides. The commenters stated that the coal mining industry is one of the most important industries in the State of Uta h, due not only to the number of jobs supported by the coal industry, but also to the economic linkages with other sectors of the economy and the high wages in the mining industry relative to other sectors of the Utah economy. The commenters stated that th ese high

- paying coal mining jobs are located in a rural part of the state in which it would be difficult, if not impossible, to replace them.

Commenters stated that Terre Haute has several manufacturing businesses that rely on that low cost energy to keep costs affordable. The commenters stated that if the proposed rule is approved, many coal

- fired plants will be forced to shut down and switch to natural

- gas generation, costing ratepayers who ultimately pay the price for new power plants. The
commenters st ated that gas prices are volatile. The commenters stated that seniors and those living on fixed incomes will be hit the hardest and that wholesale electricity prices are projected321 to increase between 27 and 55 percent over the next two years as more coal

- fired plants shut down due to other EPA rules.

Commenters stated that EPA's assessment that customer bills will actually decrease under the proposed program cannot be correct if the overall cost to America's utility industry exceeds $10 billion per year. The commenters stated that rate impacts of this magnitude will have their severest impacts on the less fortunate among residential customers who are least able to absorb the increases or to change their consumption patterns through conservation. The commen ters stated that if utility costs go up, then utility bills will go up as well

-- an outcome that will affect all customers.

Commenters stated that the cost estimates fail to reflect or capture the subsequent adverse spillover impacts of higher electricit y rates on our nation's overall economic activity. The commenters cited an analysis by NERA Economic Consulting indicating that average U.S. electricity prices would increase by 12% per year and the total costs of the rule could be between $366 billion and $479 billion over a 15

- year timeframe

. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy consumers. The commenters stated that higher energy prices disproportionately harm low

- income a nd middle

- income families. The commenters stated that the Proposed Rule would result in a direct loss of 52,000 jobs in the electric utility, mining and rail sectors due to plant closures. The commenters stated that an additional 100,000 indirect jobs are at risk for loss in communities affected by the closures, and that job losses would be concentrated in, "relatively poor, rural areas that are least able to afford the loss of high

- wage skilled jobs."

Commenters stated that the resulting expense to electr icity rates, will have the effect of increasing poverty, and reducing business efficiency.

Commenters cited the U.S Chamber of Commerce's estimates on increases in electricity costs ($17 billion increase annually, $289 billion by 2030), losses in disposal annual income ($3,400.00 decrease in typical household annually, $586 billion by 2030), losses in investments and GDP (over $50 billion annually), and increases in compliance costs for electricity providers ($28 billion annually, $480 billion by 2030). Th e commenters also cited the Heritage Foundation's estimates that aggregate GDP losses would reach $2.23 trillion by 2023. The commenters further stated that EPA's estimated $5.5 billion annual compliance cost is unrealistic. Additionally, the commenters st ated that low income families and fixed

- income seniors would be disproportionately affected and that compliance costs would be passed on to consumers or shareholders in the form of reduced return on investments.

Commenters also cited the U.S. Chamber of C ommerce annual and cumulative compliance costs and losses in GDP, and stated that lower income families would be disproportionately affected, jobs would be lost and energy rates would increase. The commenters also noted the discrepancy between the U.S. Cha mber of Commerce and EPA compliance cost estimates.

Commenters also cited the U.S. Chamber of Commerce annual and cumulative GDP, job loss, total disposable income and electricity cost impacts and stated that the impacts would be the greatest on the poor, the elderly, small business, and domestic manufacturing. The commenters322 then provided cost estimates of the recently repealed carbon tax in Australia

- $8.5 billion annual economic impact and $500 increased electricity costs to families

- as a comparison.

Commenters stated that as a rural electric cooperative, the dramatic increase in rates from the CPP will exacerbate the difficulty that poor Americans already face with the cost of electricity. The commenters stated they are providing EPA with comments on the special considerations of the impact of the proposed CPP on the ability of rural electric cooperatives to comply with the REA federal mandate that EPA should factor into promulgation of a final rule, if any is issued. The commenters stated that they ha ve invested billions of dollars in retrofitting their fossil units with state of the art emissions controls and installing new, very low emission generation in order to comply with other CAA regulations and members must still pay for them even though the C PP will restrict the operation of or force the retirement of this generation.

Commenters stated that they are intimately familiar with the challenges that today's energy bills pose to the health and well

- being of our communities. The commenters stated fur ther that it is typical to find that their clients must spend as much as 8 percent of their annual income on electricity alone, while the average for households that are not low

- income is less than 4 percent.

The commenters also stated that the low

- income families and individuals they serve are disproportionately likely to carry arrears on their utility bills and to face utility disconnection, and to avoid such a calamity, they typically sacrifice good nutrition and medical care to meet their rent and util ity obligations. The commenters explained that utility bills of the same size differ dramatically in their impact on family well

- being and health. Unaffordable energy leads to a cascade of health risks from poor nutrition, erratic medication purchase and t he threat of eviction, in addition to the dangerous possibility of disconnection from electricity. Further, the commenters stated that utility program expenditures are biased towards those who can share the costs out of pocket, and at present the vast majo rity of utility efficiency investments in their state are set up to match a small share of a larger, private consumer expenditure on new equipment or a building upgrade. The commenters noted that while their clients pay for these programs in their bills, t hey are excluded because the requirement for personal spending to access a benefit is unaffordable.

Commenters stated that practically all of the NGCC

- fired generation in Florida that the CPP anticipates to be dispatched prospectively is owned by a single investor owned utility (IOU). The commenters stated that to meet the performance standard, JEA and all other entities in Florida will have to purchase NGCC

- fired generation from that single IOU, while idling their own capable generation fleets (for which they are still recovering costs). The commenters stated that the requirement to invest in EE beyond the level that is cost effective to JEA and Florida ratepayers will cause rates to increase generally for all, but disparately for customers that do not
pa rticipate in utility

- sponsored EE or customers that invest in RE without a utility incentive. The commenters stated that the most affected by this will be the already economically disadvantaged segments of the customer base.

Commenters stated that if the proposed rule is finalized, capital investments would need to be spread and recovered over significantly fewer megawatt

- hours, resulting in an increase in the cost of the electricity for member systems and their customers. Commenters stated that even with subsidies and incentives, you cannot force homeowners to take advantage of energy efficiency323 offers, and raising power prices so high that people would be forced into it is not equitable for low income rural communities, or for the commercial and industria l consumers served by our members. The commenters then urged EPA to look for other incentives that work for low income retail consumers and not unfairly punish others, and noted that in a not for profit cooperative the cost of every incentive is spread acr oss all the member consumers.

Commenters stated that the proposed rule goes well beyond what is allowed under the Clean Air Act and dictates the operation of the generating resources, preventing the economic dispatch of the system which would unnecessaril y raise the cost to electric consumers. The commenters stated that many of these citizens are low and fixed income and can least afford an increase in their electricity costs.

Commenters suggested that the proposed rule does not strike a balance between c limate change goals and economic impacts such as job losses, trade balances, and costs of electricity, goods and services. Commenters stated that policies must ensure that low and fixed income consumers are not disproportionately impacted and further sugge sted that all sources of GHG and economic sectors should be included in initiatives to reduce emissions. Commenters urged the EPA to think about the economic calamity we face around the world if the lights went out, if electricity became too costly for fam ilies who are struggling to pay their bills every month or seniors who spend more time in their homes than most but cannot afford excessive heating or cooling bills. The commenters stated that businesses rely more than ever before on electric power to boot their computers, charge their technology and power equipment to be successful.

Commenters stated that affordable and reliable electric power is essential to the continued recovery of Indiana's manufacturing economy, which accounts for about 500,000 high

- paying jobs in the State, in addition to 28,000 in the coal industry. The commenters stated that Indiana will experience a disproportionate share of rate hikes, not just because the state is so reliant on coal for its electricity, but also because Indiana has average retail electricity prices below the national average. The commenters cited NERA estimates that the actual increase in rates for Indiana could be close to 12 percent. The commenters stated that with 1.3 million lower

- and middle

- income household s in Indiana, spending an average of 19 percent of their after

- tax income on energy, it State is vulnerable to rate hikes.

Commenters stated that an unrealistic and unduly expensive EPA rule will pass through directly to the LPC ratepayers. The commenters stated that the citizens of the TVA region, a region with lower per capita income, higher poverty rates and higher percenta ge of elderly and Social Security recipients than most of the rest of the nation, would thus be obligated to fulfill the financial obligations that will be imposed as a result of EPA's proposed rule.

Commenters cited ERCOT estimates that "energy costs for consumers may increase by up to 20% in 2020" under EPA's proposal, without accounting for transmission and natural gas supply infrastructure and other costs. The commenters cited NERA estimates that the proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% relative to a base case without the rule, and that the weighted average price increase across all customer classes (Residential, Commercial, and Industrial) is projected to be 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that EPA's proposal could cause average 2020 to 2030 delivered electricity prices to jump by 27% relative to a base case without the rule. The324 weighted average price increase across all customer classes (Residential, Comme rcial, and Industrial) is projected to be 2.8 cents per kilowatt

- hour under the proposed standards. The commenters stated that residential rates could increase by approximately 3.3 cents per kilowatt

hour under the proposed standards, a 25% increase, relat ive to a base case without the rule, equivalent to an increase in average household electric bills of $33 per month or nearly $400 per year which would impact all Texans but is particularly harmful for those with marginal income, such as elderly customers on fixed incomes or low

- income customers.

Commenters cited a November 2014 report, "Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector," prepared by Energy Ventures Analysis that found that between 2012 and 2020, all electric and gas customers would spend 60 percent (in nominal terms; 37 percent in real terms) more in energy costs. The commenters stated that residential increases would be 35 percent (nominal; 15 percent real) while industrial customers would experience electri c and gas increases of 92 percent (nominal; 64 percent real). For Kentucky residents, annual electric and natural gas spending would increase by 45 percent (nominal; 23 percent real). The commenters cited a study prepared by IHS Energy, "The Value of US Po wer Supply Diversity" that concluded that the loss of fuel diversity in the production of electricity will increase retail electricity prices by 25 percent and will reduce the average American household's disposal income by dollar 2,100. The commenters cit ed a study prepared by NERA Economic Consulting, "Potential Energy Impacts of the EPA Proposed Clean Power Plan" (Oct. 2014), that Kentuckian's can expect 12 percent increases in delivered electricity prices under a "state unconstrained scenario" and 21 p ercent under a "state constrained scenario". The commenters cited "ERCOT Analysis of the Impacts of the Clean Power Plan" findings that ERCOT consumers could expect retail energy price increases of 14 percent to 20 percent in 2020 and 5 percent to 7 perce nt in 2029. The commenters stated that increases in utility rates resulting from the proposed CPP compound the affordability issue for WKU and create additional barriers to upward educational attainment for our younger generation.

Commenters stated that h urdles to construction in Wyoming include limited site acquisition potential and complex endangered species issues. The commenters stated that assuming the construction of natural gas generation could be done by 2020 is an unrealistic assumption, given
eng ineering, permitting, transmission and construction timelines. The commenters stated that even assuming the completion of an NGCC plant sometime in the near future, the cost to do so will also have an impact on MRES and its members, as shutting down a uni t and replacing it with an NGCC plant would cause an additional increase in wholesale costs of 20%, over and above the 10% cost increase caused by the installation of the SCRs. The commenters stated that as a result, its member community of Pella, Iowa, wh ich receives 100% of its power from MRES, will experience an increase in its wholesale costs of 30% just after we have undertaken major projects to reduce CO2: Pella has retired its local coal plant and MRES is constructing a new 36 MW hydroelectric facil ity near Pella. The commenters stated that rate increases of this magnitude endanger economic development and present a very real potential that electricity will become unaffordable for the poorest among us and make electricity more expensive for facilitie s in the United States and potentially cause companies to abandon plants and relocate overseas.

Commenters stated that Ohio electricity prices that were 9% below the national 2013 average, but many Ohio families are struggling with high energy prices. The commenters stated that 53% of low to middle income households spend an average of 20% of their after

- tax income on325 energy and increased energy prices will further strain these families

. The commenters stated that projected rate increases will have a devas tating impact on manufacturing in Ohio and that EPA has drastically underestimated these prices as reputable sources have reported increases as high as 39%.

Commenters stated that the rule as proposed will result in significant electricity rate increases and additional energy costs for consumers which will fall most heavily on the elderly, the poor, and those on fixed incomes. The commenters cited a U.S. Chamber of Commerce study indicating that a plan of this type would increase America's electricity bill s, decrease a family's disposable income, and result in job losses.

Response 9 : Commenters state d that the Clean Power Plan will adversely affect low income and middle income individuals, seniors and environmental justice communities due to job losses rel ating to potential coal generating unit closures and associated markets (e.g., coal mining) and due to increases in the price of electricity and other energy products such as natural gas.

While the EPA expects that there is likely to be additional job los s in sectors related to coal attributable dues to implementation of the CPP, many jobs in this field are expected to remain. For example, the Department of the Interior continues to work on an environmental impact
statement to evaluate the potential enviro nmental impacts of extending the operation of the Navajo Generating Station (NGS) and production of coal at the nearby Kayenta Mine for an extra 25 years, through 2044. See Chapter 6 of the Regulatory Impact Analysis for employment impacts associated with the illustrative CPP scenario and responses to comments relating to employment in comment 5 of this section 8.6 above.

The EPA recognizes that the coal miner or coal plant worker who loses his or her job is not necessarily going to find a new job in energy efficiency or renewable energy. In response to the transition from coal to natural gas already underway due to lower natural gas prices, many states are implementing replicable programs to transition their workforces

– by working in public

private partner ships with their community colleges and businesses

- to secure an economic advantage as they transition to a lower carbon energy mix. In addition the Department of Commerce, Department of Labor, Small Business Administration, and the Appalachian Regional C ommission have together created an initiative to issue grants to partnerships of regionally

driven economic development and workforce development organizations in impacted coal communities. 9 In addition, the Department of the Interior has publically commit ted in the July 2014 Technical Working Group Agreement to facilitate the development of approximately 26,975,000 MWh of clean energy by December 31, 2035 in the Four Corners area. The EPA expect this commitment to support energy

- sector and other jobs in th e region. The EPA recognizes the contribution of power plants and coal mines to the economies of the Navajo Nation, the Hopi Tribe and surrounding communities in Arizona and New Mexico, as well as many other communities nationwide. The timeframe of the CPP from plan development to plan implementation allows states, utilities and other stakeholders the ability to work together to tailor their plans in the ways that best support their communities, so that they can not only reduce their

9 See https://www.whitehouse.gov/the

- press

- office/2015/03/27/fact

- sheet

- partnerships

opportunity

- and

- workforce

- and

- economic

- revitaliz

.326 greenhouse gas emission s, but also ease the transition of their workforces to the low carbon
economy.
States will make the ultimate plans as to how the CPP will be implemented by the electricity sector. These final emission guidelines will be implemented by emission sources wit hin each state upon the EPA’s approval of a state plan. The EPA has included a number of conditions to help ensure that vulnerable communities will not be disproportionately impacted by this rulemaking. These considerations are outlined in section IX of t he final rule preamble of the CPP

. Additionally, the EPA in its final rulemaking is requiring that states engage with all stakeholders in the development of their state plans, including vulnerable communities. See sections VIII.D

, VIII.E and IX.C of the f inal rule preamble of the CPP for more information.

Commenters above highlight the importance of the EPA increasing communities’ ability to access EE/RE and financial assistance programs. In section I X .C of the final rule preamble of the CPP, the EPA outli nes programs that the State of Maryland, New York, and Colorado having been employing that assist low income communities in increasing their ability to access RE/EE and financial assistance programs. The EPA encourages that states in the writing on their s tate plans use these and other models. Additionally, as stated in the preamble, the EPA in the coming months, will continue to provide information resources for vulnerable communities and states on existing federal, state, local, and other financial assist ance programs to encourage EE/RE that are already available to communities. The EPA will also provide a catalog of current or recent state and local programs that have successfully helped communities adopt EE/RE measures. The goal of these resources is to help vulnerable communities gain the benefits of this rulemaking by encouraging that states use these types of tools in their state plans. In section I X.D of the preamble for the final rule

, the agency describes federal programs and resources that are avai lable to communities.

Additionally, the EPA recognizes the potential impacts that this rulemaking could have on jobs in communities. In sections VIII.G and I X.C of the final rule preamble of the CPP for the EPA provides information on how states should consider the potential impacts that their plans may have on jobs in their communities. Additionally, the agency provides information on resources that it will be providing on programs that specifically target economic development assistance to communities affected by changes in the coal industry and electricity sector.

The EPA understands that climate change is an environmental justice issue. As stated in XI and XII.J of this final rulemaking this rulemaking will provide broad benefit to communities across the nation, and will be particularly beneficial to low income and some communities of color (in particular, populations defined jointly by ethnic/racial characteristics and geographic location) where people are the most vulnerable to the impacts of climate change. Additionally, as highlighted in this final rulemaking, environmental justice is an important priority for the agency. The EPA has worked closely with its Office of General Counsel and Office of Environmental Justice when developing these guideline s. More information on how the agency considered environmental justice impacts in the rulemaking is available in sections IX and XII.J of this final rule preamble of the CPP.327 Comment 10 : Comments provide support for Clean Power Plan and economic analysis

. Commenters stated that under the business as usual scenario, Georgia rates and bills will increase, and citizens will also continue to pay in health costs. The commenters stated that in every rate case since 2004, Georgia Power has asked for

- and recei ved

- increases in its rates amounting to hundreds of millions of dollars and the average residential customer of Georgia Power saw an increase of approximately 35 percent between 2003 and 2013, which corresponds to an increase of approximately $44.05 on t he average residential monthly bill. The commenters stated that all of these rate increases were made prior to the proposal of the Clean Power Plan. The commenters stated that under the current scenario, many of the costs of pollution are borne by citizen s in sick days, hospital visits, and even deaths. The commenters stated that dispatch and planning scenarios under the Clean Power Plan

- by requiring utilities to internalize some of the costs of carbon pollution

- will take a step towards a more accurate reflection of the true economic costs of producing power.

Commenters stated that a slow or inadequate response to climate change would produce significant costs and negative impacts on Virginia consumers, and that costs of implementation must be balanced with the benefits to our health, environment, and economy in evaluating any proposal as it relates to Virginia consumers. The commenters stated that economic cost and benefits, along with health and environmental benefits, are all vitally important to cons ider when accurately and responsibly evaluating how the Proposed Rule will affect Virginia

consumers. The commenters stated that the EPA estimates a nationwide 30% reduction in CO2 emissions by 2030, and Virginia's proposed CO2 reduction goal is 43%. The commenters stated that EPA estimates a cost of between $5.5 and $7.5 billion to achieve interim goals, and a total of $7.3 to $8.8 billion to achieve the final goals. The commenters stated that demand

- side programs that offset higher rates to end users wit h expected savings from reduced electricity use. The commenters stated that according to EPA, while rates may increase, overall bills may be lowered through reduced energy use resulting from increased energy efficiency and cost

- effective conservation measu res.
Commenters stated that modern NGCC unit features the lowest capital cost relative to other forms of generation and provides customers with the most cost

- effective generation per thousand households served and thousand megawatt hours generated. The com menters stated that the economic attributes of NGCC units offer affordable emissions reductions and are a clear market choice for future generation.

Commenters stated that the largest fossil fuel corporations already use an internal cost of carbon above t he proposed EPA regulations, and that internalizing these costs will even the playing field between renewable energies and fossil fuels.

Commenters stated that conversely an electric bill that goes up one to five percent will be down in the financial noise of most households, yet could greatly benefit the implementation of CO2 reductions from the one commodity most essential to our modern way of life.328 Response 10 : The EPA agrees with comments that state under baseline conditions (or without the CPP), the c osts of carbon pollution in the electricity sector are borne by citizens experiencing health and welfare effects. These health and welfare effects are discussed in section II of the final rule preamble and in the Regulatory Impact Analysis Chapter 4. GHG emissions impose costs on society, such as negative health and welfare impacts, that are not reflected in the market price of the goods produced through the polluting process

– in this case electricity. As the commenters stated, the Clean Power Plan

- by r equiring utilities to internalize some of the costs of carbon pollution

- will take a step towards a more accurate reflection of the true economic costs of producing power. EPA also agrees that a slow or inadequate approach to addressing greenhouse gases w ould be costly in terms of damages sustained and would impose climate change health and welfare impacts on society.

Comment 11 : EPA analysis underestimates good effects and/or overestimates bad effects.

Commenters described a GDP multiplier and stated th at assessing the macroeconomic impact of policy choice generally relies on complex models of the economy. The commenters stated that economically beneficial energy efficiency investments yield net savings; the reduction in energy costs exceeds the increase in technology costs. The commenters also stated that such investments have three economic effects from the point of view of the economy: (1) The inclusion of energy efficient technologies in energy using durables increases the output of the firms that pro duce the technology; (2) To the extent that the energy using products are consumer durables, they increase the disposable income that households have to do other things, such as buy other goods and services; (3) To the extent that the energy using products are utilized as inputs in the production of other goods and service, like trucks used to deliver packages or vegetables, they lower the cost of those goods and services. The commenters stated that in competitive markets, those costs are passed on to the c onsumer in the form of lower prices, and this also increases the disposable income of the household to buy other goods and services

. Commenters stated that a popular measure is to estimate jobs per dollar invested. The commenters stated that in the electr icity space, a comparative analysis of efficiency compared to generation found that efficiency created twice as many jobs per dollar spent on nuclear power and 50% more jobs than coal and gas generation, and these large increases in economic activity lead to increases in employment. The commenters stated that the effect is magnified by the fact that the non

- energy sectors of the economy are substantially more labor intensive than energy production, and the energy sector is less than half as labor intensive as the rest of the economy. The commenters puts forward that this effect is compounded where energy is imported (as in the U.S. transportation sector), and as consumers substitute away from energy, the goods and services they purchase stimulate economic an d disproportionately large job growth. The commenters remarked that these efforts to model the economic impact of energy efficiency have proliferated with different models being applied to different geographic units, including states and nations. The comme nters stated that the results differ across studies because the models are different, the impact varies according to the size of the geographic unit studied and because the assumptions about the level and cost of energy savings differ. The commenters noted that these differences are not an indication that the approach is wrong; on the contrary, all of the analyses conclude that there will be increases in economic activity and employment, and given that there329 are different regions and different policies bein g evaluated, we should expect different results. The commenters stated that, taken together, the overestimation of costs and underestimation of benefits lead to a substantial and systematic underestimation of the net benefits of efficiency gains, and becau se the impact of the efficiency improvements depends on (a) the size of the improvement and (b) the type of consumer durable being studied, (c) the sector in which it occurs and (d) the region being analyzed, one cannot offer a single, simple estimate. The commenters stated that the exact calculation of costs and benefits is likely to underestimate the benefit/cost ratio by a factor of at least two because of the failure to reflect the macroeconomic benefits and cost reducing trends, both of which are posit ive externalities of the adoption of performance standards.

Commenters stated that the RIA overstates benefits and underestimates costs, by double counting benefits of energy efficiency and inappropriate netting of market

- driven and state program

driven e fficiency, not counting integration costs of intermittent renewable technology, overestimating emission reductions associated with renewable technology and practical conflicts with grid operation, not including reliability impacts, and not counting net emp loyment impacts. The commenters stated that the RIA includes gross employment effects of energy efficiency and renewable energy programs, not net estimates accounting for jobs lost due to higher energy prices. The commenters stated that overall, U.S. carbo n intensity has declined over the last decade and half (or longer), largely as a result of autonomous changes in fuel sources and that such improvements are likely to continue, yet the CPP claims credit for future reductions that would occur in the absence of the CPP. The commenters stated that each state has a unique economic structure, with various productive activities contributing to each one's economy. The commenters stated that energy policy and regulation should not dictate "acceptable" industrial

se ctor makeup, through regulatory actions that artificially inflate energy costs. The commenters stated that such regulation interferes with the natural, market

- driven changes in state economies. The commenters stated that this is an area where the CPP under estimates costs of the impacts imposed on other industries that are not the direct target of the proposed regulation.

Response 11 : The commenters assert that economically beneficial energy efficient technologies lead to net savings as the reduction in ene rgy cost exceeds the cost of energy efficient technology. Further the commenters stated that energy efficiency creates more jobs per dollar invested than nuclear, coal or natural gas generation. The commenters stated that, taken together, the overestimatio n of costs and underestimation of benefits lead to a substantial and systematic underestimation of the net benefits of efficiency gains associated with energy efficiency.

The EPA believes that the economic analysis undertaken to support the Clean Power Pl an and reported in the Regulatory Impact Analysis (RIA) comprehensively addresses the benefits, costs and economic impacts of the CPP for illustrative implementation scenarios

. Section V of the preamble discussed costs of the final emission guidelines. Dem and side e nergy efficiency is discussed in the preamble for the final rule, the Demand Side Energy Efficiency TSD, and in Chapter 3 of the RIA. The EPA notes that final guidelines’ Best System of Emission Reductions (BSER) determination does not take into account demand

- side energy efficiency (EE), and the emission performance rates for each of the two source categories do not reflect demand

- side EE. However, many commenters also urged the EPA to allow states and sources to rely on demand

side EE as an elem ent of their compliance strategies, as energy efficiency measures are in widespread use across the country and provide energy savings that reduce emissions, lower330 electric bills, and lead to positive investments and job creation. The EPA agrees, and the fi nal guidelines provide ample latitude for states and utilities to rely on demand

- side EE in meeting emission reduction requirements.

Comment 12 : Small businesses will be impacted by the Clean Power Plan.

Commenters stated that along with helping to combat climate change, stronger clean energy standards can help create new business opportunities for small businesses. The commenters stated that small businesses, the majority of which are unaffected by the st andards themselves will benefit as they supply the services and products to help those who do have to meet them. The commenters stated that eighty

- seven percent of small business owners said that improving innovation and energy efficiency are good ways to increase prosperity for small businesses.

Commenters stated that electricity prices will go up as a result of this proposal, and that energy costs are one of the top three business expenses for 35% of small businesses.

Commenters stated that increases in electricity costs disproportionately impact small businesses, which typically lack pricing power in their respective markets. The commenters stated that proposed rule, if finalized, would lead to significant increases in electricity costs that would harm

s mall businesses.

Commenters stated that EPA has failed to convene a Small Business Advocacy Review panel and conduct a regulatory flexibility analysis to evaluate the proposed rule's impact on small businesses, as required by the Regulatory Flexibility Ac t and Small Business Regulatory Enforcement Fairness Act. The commenters stated that the impact on electricity prices and the potential regulation of entities beyond the fence line undoubtedly will impact small businesses.

Commenters stated that EPA has f ailed to convene a Small Business Advocacy Review panel and conduct a regulatory flexibility analysis to evaluate the proposed rule's impact on small businesses, as required by the Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairne ss Act. The commenters stated that electricity costs are a significant concern for many small businesses and are a top three business expense for 35% of all small businesses. The commenters stated that for forgers, metal and energy make up the majority of input costs.

Commenters stated that the negative effects of the Clean Power Plan will hit small businesses the hardest as they tend to have far less capital set aside to absorb unforeseen expenses such as increases of input costs (like electricity), or pr oblems due to an unreliable electricity grid. The commenters stated that many small businesses will be unable to remain viable when hit with higher energy costs and unreliable electricity supplies, forcing them to close their doors.

Commenters stated that with the exception of Kansas City BPU, Kansas public power systems are too small to employ environmental staff to comment on proposed rules and position the utility to lessen the impacts of comprehensive environmental regulations. The commenters stated th at EPA should specifically consider the issues and concerns of small systems as the proposed rule is developed.331 Commenters stated that the Clean Power Plan rule will boost bottom lines and help create jobs as states look to comply with the standards and a chieve reductions through various measures. The commenters supported the compliance flexibility inherent in the rule. The commenters cited an American Council for an Energy Efficient Economy (ACEEE) report finding that energy efficiency investments alone c ould increase national gross domestic product by $17.2 billion in 2030, and produce a net gain of about 611,000 jobs, with all 50 states seeing net job creation, all
at no net cost

. The commenters stated that a review of the Northeast's Regional Greenhouse Gas Initiative (RGGI) program by the Analysis Group found that over the first three years, the program created more than 16,000 additional jobs with each of the 10 states showing net job additions. The commenters stated that 56 percent of small business o wners still support EPA's regulations even if it would cause utility rates to rise. The commenters stated that small businesses are strategically positioned to help states achieve their carbon reduction goals, igniting job creation opportunities and cost s avings along the way. The commenters stated that business opportunities exist with respect to modernizing inefficient power plants and buildings as well as operation new, cleaner and more efficient power plants; conducting energy audits and retrofitting re sidential as well as commercial buildings to be more energy efficient; and developing new and innovative technologies throughout the supply chain. The commenters stated that ACEEE conducted an analysis and found that by 2030 the rule could induce over $625 billion of investment in various energy efficiency industries and behaviors, and create an average of over 400,000 jobs per year both directly and throughout the economy

. The commenters cited an Analysis Group report that while the Regional Greenhouse Gas Initiative (RGGI) program costs initially increased electricity rates, the impact of energy efficiency investments (using RGGI allowance revenues) significantly reduced commercial and residential electricity use, placing downward pressure on rates over ti me, and combined with lower consumption, tended to generate on average much lower electricity bills

. Commenters stated that the projected CO2 emission reduction from the proposed rule is, at most, 555 million metric tons (mmt) in 2030, which represents only 1.3 percent of projected global CO2 emissions in that year. The commenters stated that this reducti on in 2030 would offset the equivalent of just 13.5 days of CO2 emissions from China. The commenters stated that the EPA's economic analysis grossly overstates and overestimates the benefits of the proposed rule, and underestimates the burdens and translat ed costs on businesses and those they serve. The commenters stated that EPA has failed to convene a Small Business Advocacy Review panel and failed to conduct a regulatory flexibility analysis to evaluate the proposed rule's impact on small businesses, as required by the Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act. The commenters stated that the term "social cost of carbon" is not recognized as a legitimate economic metric or methodology and has not received general

ac ceptance or even legitimate scrutiny necessary for a transparent rule

- making. The commenters stated that "co

- benefits" have not been confirmed attributable to this rule and should not be considered as sufficient evidence to support the rule's effectiveness

. Commenters stated that EPA has failed to convene a Small Business Advocacy Review panel and conduct a regulatory flexibility analysis to evaluate the proposed rule's impact on small businesses, as required by the Regulatory Flexibility Act and Small Bus iness Regulatory Enforcement Fairness Act. The commenters stated that instead of conducting this analysis, EPA claims that the proposed rule will not have a significant economic impact on a substantial number of small entities because States, not EPA, are ultimately responsible for implementing332 Section 111(d); this claim is completely inaccurate because the impact on electricity prices and the potential regulation of entities beyond the fence line undoubtedly will impact small businesses. The commenters sta ted that EPA itself recognizes that the proposed rule would result in increases in electricity prices in some areas by as much as twelve percent. The commenters stated that electricity costs are a significant concern for many small businesses and are a top three business expense for 35 percent of all small businesses; this alone demonstrates the widespread impact that the proposed rule would have on small businesses. The commenters stated that EPA should withdraw the current proposal, convene a Small Busine ss Advocacy Review panel, and prepare a regulatory flexibility analysis before proceeding with a new proposal under Section 111(d).

Commenters stated EPA is not adequately addressing the differences between large utilities and smaller utilities such as Co operatives and the assumptions associated with Energy Efficiency state goals are unrealistic and detrimental to the financial wellbeing of their members.

Response 12 : Commenters addressed three different issues relating to small business. Com ments include: 1) commenters supportive of the impact the Clean Power Plan will have on small businesses and suggest ing helping combat climate change and stronger clean energy standards can help create new business opportunities for small businesses, 2) commenters stati ng that EPA failed to convene a Small Busines s Advocacy Panel or complete a Regulatory Flexibility A nalysis, and 3) commenters asser t ing that the Clean Power Plan will have disproportionately negative impacts on small business.

Regarding comments received stating that the CPP and stronger clean e nergy standards will generate business opportunities for small businesses, the EPA appreciates these comments. The EPA agrees that there will be business opportunities and potentially new jobs in the power sector associated with both improving the efficiency of fossil

- fuel fired power plants and construction of new natural gas

- fired and renewable power production. In addition, the EPA expects that there will be opportunities in renewable energy and in the demand

- si de energy efficiency sector s

. The EPA disagrees with commenters’ assertion that the EPA did not consider small businesses when developing the proposed rule. The EPA is aware that there is substantial interest in the rule among small entities (e.g., munic ipal and rural electric cooperatives) and has conducted an unprecedented amount of stakeholder outreach. As part of that outreach, agency officials participated in many meetings with individual utilities as well as meetings with electric utility associatio ns. Specifically, the EPA Administrator, Gina McCarthy, participated in separate meetings with both the National Rural Electric Cooperative Association (NRECA) and the American Public Power Association (APPA). The meetings brought together leaders of the r ural cooperatives and public power utilities from across the country. The Administrator discussed and exchanged information on the unique challenges, in particular the financial structure, of NRECA and APPA member utilities. Agency officials also engaged w ith industry leaders and trade association representatives from various industries. While formulating the provisions of the proposed rule, the EPA considered the input provided over the course of the stakeholder outreach. After proposal, the EPA continued to seek input from stakeholders, including small businesses. Opportunities for stakeholder input included providing testimony during public hearings and submitting comments during the public comment period. In addition, agency officials participated in ove r 300 meetings after proposal with a full range of stakeholders,333 including stakeholders with small business interests. The EPA considered this input in determining the provisions of the final rule.

The EPA disagrees with commenters that believe the EPA fai led to satisfy the Regulatory Flexibility Act’s statutory obligations. The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the APA or any other statute, u nless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The impact of concern is any significant adverse economic impact on small entities directly regulated by the rule. See American Trucking Assoc. v. EPA

, 175 F.3d 1029, 1044

- 45 (D.C. Cir. 1999). The EPA made such a certification and, thus, a regulatory flexibility analysis is not required. In addition, the EPA was not statutorily obligated to convene a small business advocacy review panel. The EPA also disagrees with commenters that believe the CAA section 111(d) rule for existing power plants is fundamentally different from the NAAQS. The EPA continues to assert that the establishment of NAAQS is analogous to establishing section 111 (d) emission guidelines and that the EPA’s analysis here is consistent with the analysis conducted when the EPA establishes NAAQS. As stated in the preamble to the proposed rule (79 FR 34946

- 34947, June 18, 2014) and reaffirmed in the preamble to the final rule, the EPA’s rule will not impose any requirements on small entities. Specifically, emission guidelines established by the EPA under CAA section 111(d) do not impose any requirements (or associated costs) on non

- state entities (i.e., existing power pla nts) and, thus, will not have a significant economic impact upon a substantial number of small entities. After emission guidelines are promulgated, states establish standards on existing sources, and it is those state requirements that could potentially im pact small entities.

Finally with regards to increases in electricity prices, the EPA estimates and discusses potential changes in electricity prices in chapter 3 of the Regulatory Impact Analysis

. I m pacts to secondary market s that are consumers of electri city including small businesses are discussed in chapter 5 of the RIA. For the final rule, as shown in the RIA by 2030, electricity prices are expected to not change or rise slightly on average nationwide ( increase by zero to less than one percent) as a result of the CPP. Impacts to secondary markets including small businesses that are consumers of electricity will be dependent upon a variety of factors discussed in the RIA chapter 5. It is important to note that these electri city price change projection results are based upon illustrative scenarios of state implementation plans and actual impacts may differ depending upon the actions taken by sources to comply with the CPP. The flexibility afforded to states in developing thei r state plans allows them to encourage compliance methods which include design elements that may mitigate or promote particular impacts based on their priorities.

Comment 13 : Benefits of the Clean Power Plan are under or overestimated.

Commenters conte nd the benefits of the CPP are overstated.

Commenters stated that EPA fails to include other human health impacts due to the proposed rules and cited a report published by Senator Barrasso that lists increased hospital visits, illnesses and premature death s due to joblessness, increased healthcare costs, and damages to children's health and family well

- being as a result of unemployment due to EPA regulation. Commenters334 further cited a March 11, 2014 letter to the EPA Administrator emphasizing the public hea lth impacts of reliable electricity, including its importance to food safety, safe drinking water and protection from extreme temperatures. Commenters added the letter stated that EPA must take into account the net impact of EPA rules on health, including those plausibly associated with increased costs of energy and unemployment.

Commenters stated that proposed rule skews the cost

- benefits and imposes unnecessary costs which have impacts on human health due to higher electricity prices and economic constra ints on the U.S. economy that have not been addressed and weighed against the speculative benefit conclusions presented by EPA. The commenters discussed burdens on the manufacturing industry as well as cited references with the following public health effe cts associated with employment status: (1) continuously

- employed individuals experienced, on average, an additional life expectancy of four to five years, (2) reducing unemployment has been estimated to prevent up to 2,500 premature deaths a year, (3) in a Congress' Joint Economic Committee Report by Dr. Harvey Brenner, studies found that a one percent increase in the unemployment rate was associated with a two percent increase in premature deaths. The commenters stated that using these estimates and econom etric models, a 2004 study by Brenner found that reductions in coal

- fired power would result in between 170,000 and 300,000 premature deaths. The commenters summarized by concluding that the proposed rule is not a wise social investment to address prematur e mortality.

Commenters also stated that EPA did not assess the number of premature deaths the rule will cause through loss of disposable income to Americans, and stated that Texans particularly are at risk. The commenters said a 15% increase in energy cos t due to the proposed rule will place the population in Texas in dire straits. The commenters said that 700,000 families spend nearly three

- quarters of their income on energy, and that 49% of Texas's families have gross annual incomes of $50,000 or less, w ith an average after

- tax income of $23,756, or less than $2,000 per month. The commenters also stated that about 700,000 families in Texas live well below the federal poverty line, earning less than $10,000 per year, and are being squeezed hardest by

ener gy cost increases.

Commenters stated that the implications of cost increases in low income people will translate to going without food, medical care and prescription drugs. The commenters cited a report by Lutter and Morrall which stated that "regulations to promote health and safety that are exceptionally costly relative to the expected health benefits may actually worsen health and safety, since compliance reduces other spending, including private spending on health and safety. Past studies relating inco me and mortality give estimates of the income loss that induces one death

- a value that we call willingness

- to

- spend (WTS)

- to be around $9 to $12 million ($US 1990)." The commenters also cited EPA's statement: "people's wealth and health status, as

meas ured by mortality, morbidity, and other metrics, are positively correlated. Hence, those who bear a regulation's compliance costs may also suffer a decline in their health status, and if the costs are large enough, these increased risks might be greater th an the direct risk

- reduction benefits of the regulation." The commenters stated that NEADA 2008 National Energy Assistance Survey found similar results in where increased energy costs resulted in more sickness.335 Commenters stated that EPA impermissibly cal culated health benefits due to reductions in criteria pollutant concentrations to below the level of the NAAQS, and dramatically skewed the climate benefits by presenting global benefits rather than just U.S. benefits. The commenters stated that mining jo b losses in West Virginia were underestimated because less productive mines would be closed first. The commenters stated that coal

- fired EGU job losses in West Virginia were underestimated.

Commenters stated that EPA appears to have grossly exaggerated t he benefits from the proposed rule, particularly because most reductions in carbon dioxide emissions have already occurred since 2005. The commenters stated that EPA should not be claiming benefits that have already been achieved, but rather should be limi ted to those benefits that are anticipated from the implementation of the proposed rule. The commenters stated the costs are underestimated because EPA assumes that the utilities can easily switch fuels for existing sources and build new power plants that rely on natural gas and renewable energy. The commenters stated that EPA also minimizes the cost of the proposed rule because it unrealistically assumes that the price of natural gas will remain at its historically low levels for the next 25 years. The com menters stated that forcing 50 percent of coal

- fired power plants to retire would equate to the loss of approximately 500,000 jobs nationwide, and that the number of new "green" jobs will not offset the anticipated job losses.

Commenters stated that the p roposed rule overestimates benefits, and underestimates costs.

Commenters stated that it reviewed data from 93 plants in 31 states, with an average CO2/MWh rate of 2,626, or roughly 20 percent less efficient than the average coal plant. The commenters stated that these 93 plants employ at least 8,000 employees and hav e a nameplate capacity of approximately 50 GW. The commenters stated that Pennsylvania is the most affected state, with 13 plants in danger of retirement, followed by Michigan, with seven possible retirements, and Illinois with six. The commenters stated t hat there are 14 states that could force at least three plants into early retirement. The commenters stated that Jonathan Masur and Eric Posner examined several past RIAs from EPA and found that had the analyses monetized the job losses, the costs of the r egulations would have exceeded the benefits. The commenters stated that using a central estimate of $100,000 per displaced worker, the monetized costs for this rulemaking would total $4.2 billion, and that this would bring topline compliance cost to $13 bi llion.

Commenters stated that EPA failed to adequately or reliably analyze the potential costs and benefits of the proposed CPP; by simultaneously overestimating the potential benefits of the proposal and underestimating the costs, EPA claims (in error) t hat the proposed rule will produce economic benefits. According to the commenters, if done properly, a cost

- benefit analysis of the CPP would reveal significant costs in both the short term and the long term. The commenters stated that first, EPA's relianc e on the social cost of carbon is wholly inappropriate because that calculation has not been subject to a rigorous and transparent rulemaking process, and it fails to address properly international benefits and costs; second, EPA fails to use full

- economy modeling to evaluate employment impacts, which fails to account for the negative impact on employment likely to be experienced by other industries that support or rely upon coal generation and the communities surrounding them; and finally, EPA's reliance o n co

- benefits from simultaneous reductions in pollutants other than GHGs is misplaced and must be revised to336 more appropriately reflect the health benefits that would actually he attributable to this proposed rule.

Commenters stated that this proposed rul e could place New Mexico's utility ratepayers, employees, businesses, tax base and economy in jeopardy and could harm the wellbeing of New Mexico families and the "public interest" of the State of New Mexico. The commenters stated that the risk to these co nstituencies easily eclipses and outweighs the health risk that EPA claims New Mexico's citizens may experience associated with improving New Mexico's existing coal fired generation emissions.

Commenters stated that the Agency resorted to methods of calcu lating costs and benefits that are unacceptable, and that did not follow the requirements by the 111(d) of taking of costs of compliance into account. The commenters said that the cost

- benefits analysis have three structural defects: 1) its use of foreign benefits to justify domestic costs; 2) its reliance on alleged

co

- benefits, especially reductions in emissions of fine particulate matter (PM2.5); and, 3) its failure to account for "carbon leakage," which is the risk that energy

- intensive domestic industr ies will move plants and activities abroad in response to EPA finalizing its proposed rule. http://www.washingtontimes.com/news/2014/jul/29/gray

- a

- costbenefit

- analysis

- from

- epa

lacking

- in

- c/print/. (Please see section 8.7.2, comment 3 for EPA’s response to comments on the use of global SCC estimates and section 8.8 for EPA’s response to the comment concerning co

benefits from PM2.5 reductions.)

Commenters stated that if EPA's analysis is amended to focus on domestic benefits and to remove consideration of c o

- benefit pollutants that the agency already controls under different regulations, the adjusted benefits of the proposed rule would fall significantly short of its acknowledged costs. The commenters added that this excess of costs over likely benefits beco mes even clearer once carbon leakage effects, which will inevitably pressure U.S. industry to relocate

- and continue polluting

- overseas, are taken into account. The commenters said that CPP fails to satisfy the President's mandate of using the "best avail able techniques" of cost

benefit analysis.

Commenters cited NERA estimates that the proposed rule would conservatively cost the economy at least $41 billion per year in compliance and over $366 billion in cumulative costs from 2017

- 2030. The commenters stated that the agency double counted the same public health

co

- benefits under previous air quality rules.

Commenters stated that EPA failed to estimate the number of premature deaths associated with the loss of disposable income. The commenters said that EPA should have updated and used the U.S. Office of Management and Budget (OMB) federal estimate of one premature death for every $12 million ($US 2010) in reduction of disposable income, and stated that this methodology is used by OMB, FDA, OSHA and EPA to understand the degree to which their regulations induce premature death amongst those who bear the costs of federal mandates.

Commenters stated that one measure of the loss of disposable income is the increase in consumer costs which EPA estimates at $ 360 Billion, and that this loss of disposable income would cause 30,000 premature deaths. The commenters said that this adverse impact swamps the purported benefits of reducing particulate matter associated with the rule.337 Commenters stated that EPA attem pts to make up for the almost absurd lack of simple economic justification for the rule by suggesting that reducing operations and emissions from coal

- fired power plants will have ancillary public health benefits. The commenters said that even if such an

u nsupported position were rational, it is beyond reason to suggest that sufficient public health benefits could accrue to offset the significant costs of this rule. The commenters added that the cost/benefit equation ignores the negative public health impac ts of reducing the disposable income of those who are affected by the rule. The commenters said that this rule, if implemented, will significantly impact the costs of electricity, and that cost will reduce the ability, particularly of low income ratepayers , to afford other essential goods and services that directly affect their health and welfare, including medical care, medicine, adequate food and housing and the expenses required to be sufficiently educated and prepared to acquire and maintain employment. The commenters said that the strongly positive correlation between income and public welfare and longevity has been well established and that any cost/benefit analysis that ignores it cannot be considered to be valid or credible.

Commenters stated that h ealth costs of the CPP are 9 times greater than the "co

- benefits" claimed by EPA: $245.2B

- $329.9B vs $16B

- $37B. The commenters provided text from The November 2014 NERA Economic Consulting study "Potential Energy Impacts of the EPA Proposed Clean Power Pla n" that looked at two scenarios, one where all 4 building blocks were used (state unconstrained) and one where only the first two are used (state constrained). The commenters provided an equation to determine the impact on premature deaths as a result of t he CPP through 2031. The commenters presented the conversion of loss of discretionary income to premature deaths and also the conversion to premature deaths using the EPA value of a statistical life. Based on the information provided, the commenters indica ted that when using the constrained scenario the cost of premature deaths is higher than when using the unconstrained scenario. The commenters said based on the results the health costs are higher than the co

- benefits and that the costs to the economy are far greater than claimed by EPA. The commenters said that EPA's cost

benefit justification for the rule is without basis and the rule must be withdrawn.

Commenters stated that the proposal is unlawful, ineffective, misguided, arbitrary and capricious due to the extreme imbalance in costs and benefits when benefits regulated under other rules are excluded.

Commenters stated that EPA must conduct a thorough analysis on the costs and direct domestic benefits of any final guidelines. The rule as proposed sim ply double counts co

- benefits of emissions reductions from domestic power plants and cited only immeasurable global climate

related benefit. The commenters said that the EPA should also work with the Department of Energy to analyze any proposed impacts on federal and private sector investment in clean coal technology and the resulting impacts on GHG emissions. (Please see section 8.7.2, comment 3, for EPA’s response to the comments on the scope of the climate benefits, including the justification and use an alysis of global estimates of the social cost of carbon.)

Commenters assert that the benefits of the CPP are understated.

Commenters stated that the implementation of the Clean Power Plan in Texas would further increase water savings in the state by about two thirds more compared to the baseline.338 Commenters stated that the CPP can also reduce water consumption, a benefit that is highly consequential for many western states. At both of the commenters ’ facilities, the export of thermal energy enables us to use less water in cooling towers to condense the steam for reuse in the boiler.

Commenters stated that the reduction of carbon combustion from generating units will not be a burden to the economy but a benefit. The commenters stated that the market signals that reach consumers at the point of purchase are heavily skewed by 7.2 billion in subsidies to fossil fuel industries and only 400 million in the renewable and non

- combustion industries, and that explicit recognition of the benefits of abating carbon com bustion is helpful in giving consumers better signals. Commenters further stated that by unleashing efficiency improvements, emissions reductions at the affected and other industrial sources will continue so long as a competitive marketplace continues to e xist.

Commenters also stated "The evidence of the nationwide impact of the emission rate reduction standards in the CPP leads to the conclusion that the benefits outweigh the costs by so many orders of magnitude that a more ambitious national goal could b e achieved with very little adverse effect on the national economy or employment levels." Commenters cited several studies, including IEA's 2014 World Energy Outlook which support these conclusions and in some cases indicate that shifting to non

- carbon ba sed energy sources "is likely to increase, rather than slow, the growth of those economies ." Commenters stated, "We conclude that the annual benefits of a more ambitious national standard for reduced carbon emissions could exceed $1 trillion by 2030 if the labor productivity gains from reducing the future workforce's exposure to neurotoxins is fully accounted for."

Commenters stated that jobs created by renewable energy resources nationally reflect the significant job creation potential of renewable energy compared to coal

- fired power with the wind industry employing 80,000 and the solar industry employing over 140,000 people, a total of over 200,000 people compared to about 130,000 people employed nationally at coal mines and coal

- fired power plants. The c ommenters stated that this impressive considering that solar and wind makes up about 8 percent of the electricity generation in the U.S (75 gigawatts), compared with the 40 percent currently generated by coal (310 gigawatts); on average, solar and wind
gen eration employ a little over twice as many people per megawatt as coal generation. The commenters stated that if carbon emissions from coal are reduced and renewable energy potential developed, the state will reap significant economic, job, public health, and climate benefits.

Commenters stated that North Carolina customers benefit from the increased use of lower

- cost resources (energy efficiency and renewables) and the corresponding decrease in generation from higher

- cost resources. The commenters stated that increasing energy efficiency above the EPA

Case level in the Moderate EE scenario has the effect of displacing 1,700 GWh of fossil generation in 2020, rising to 3,500 GWh in 2030. The commenters stated that as a result of even higher energy efficiency savings, the Advanced EE scenario displaces 3,700 GWh of existing fossil generation in 2020, and 6,600 GWh in 2030. The commenters cited a recent analysis by the Natural Resources Defense Council showing that EPA used outdated renewable energy cost and pe rformance numbers, including levelized costs for both wind and solar energy that are 46% above current averages. The commenters stated that EPA should update cost and performance339 data for renewable energy resources in order to reflect the dramatic cost red uctions that have occurred in recent years. The commenters stated that EPA should use those updated projections to more accurately quantify the amount of renewable energy that can be deployed at reasonable cost in North Carolina.

Commenters stated that cl imate change impacts are closely linked to infrastructure damage, property damage, diminished agricultural production, diminished resource availability and poor air quality, all of which present severe economic and public health implications. The commenter s stated that climate and weather events in 2012 alone cost the American economy more than $100 billion, and the National Climate Assessment has projected that by the end of the century, the annual cost to the national economy of responding to sea level ri se and flooding events could be as high as $325 billion. The commenters stated that when considering the annual implementation costs associated with the proposed rule (an estimated $7.3 billion to $8.8 billion in 2030), it is important to also consider the annual economic and health benefits (an estimated $55 billion to $93 billion in 2030). The commenters stated that since 1970, every dollar invested in compliance with the Clean Air Act has yielded $4

- $8 in economic benefits.

Commenters stated that failur e to act to reduce greenhouse gas emissions will be costly and that action to reduce carbon emissions generates economic benefits. The commenters stated that California's Renewable Portfolio Standard (RPS) is projected to generate $60 billion in the Califo rnia economy and create up to 235,000 jobs. The commenters stated that by 2015, Illinois' RPS is projected to bring nearly $6 billion in new investment and create over 5,000 jobs, while its Energy Portfolio Standard is projected to save the average househ old close to $100 a year, to stimulate nearly $5 billion in economic activity, and to create over 16,000 new jobs. The commenters stated that Maryland's portfolio of climate and energy programs would generate $1.6 billion for the state's economy and suppor t 37,000 jobs. The commenters stated that Oregon's public purpose charge have produced the equivalent of 2,200 full

- time jobs and added $2.7 billion to the local economy, while also saving utility customers $1.3 billion on their energy bills through reduc ed energy demand. The commenters cited other examples from Massachusetts, New York, and Washington.

Commenters stated that while retail rates will increase slightly in Virginia, the lower household consumption counters that effect on the overall househol d bill and results in as much as an 8 percent reduction in the average household bill. The commenters stated that the only "second

order" job impacts that EPA evaluated are jobs in the coal mining and gas extraction sectors, and that EPA did not calculate "second

- order" jobs associated with higher levels of renewable resources, so the figures represented in EPA's job impact numbers are conservative estimates of the true job creation benefits of the proposal. The commenters stated that that the Clean Power P lan proposal will overwhelmingly benefit Virginia, will result in net negative costs over nearly all years of the compliance period and will produce significant public health and economic benefits.

Commenters stated that that the Guidelines exemplify well designed federal policy that can help drive innovation, create jobs for US workers, benefit US consumers and bolster international efforts to curb climate change.340 Commenters stated that a more complete modeling of the clean power program's economic impac ts shows that they would be enormously positive. The commenters stated that energy obtained by burning carbon is "cheap" relative to renewable forms of energy only when most of the costs of carbon

- based energy are left out of the price of that energy. The commenters stated that while coal

- fired power plants provide the direct benefit of slightly cheaper power than clean alternatives (a premise that will remain valid for only the next two or three years), the indirect costs of such costs are staggering. The commenters stated that this is because coal

- fired power plants are essentially enormous toxin factories

- an economic reality that has yet to be reflected in the price the power that they produce. The commenters stated that only by ignoring its enormous heal th and environmental impacts can coal

- fired power be considered a "low

- cost" energy source, the use of which promotes economic efficiency and job creation.

Commenters stated that on average, preschool children in the United States have had their intellect ual capacity reduced not just by 7 I.Q. points from their exposure to lead, but by another 7 points from their exposure to methylmercury, for a combined reduction of 2 x 7 = 14 I.Q. points. The commenters stated that research suggests that while an increas e of 1 standard deviation results in a 15% increase in average wages, it results in national productivity increases of approximately 150%, due to a multitude of external effects of intellectual capacity on productivity

. The commenters stated that putting f resh data into the EPA's Integrated Planning Model yields a revised estimate that compliance with the Clean Power Plan would reduce CO2 and related emissions for 2030 by 30% with respect to 2012 levels, reduce the annual costs to electric power to consumer s by between $6.4 and $9.4 billion, and yield health and environmental benefits of from $64 to $99 billion due to the reduction in SO2, NOx, PM2.5 emissions. The commenters stated that if the Clean Power Plan is not adopted, and coal

- fired power plants are allowed to continue to inject neurotoxins into the environment at the current pace, the productivity of those entering the nation's workforce could be held to half what it would otherwise be. The commenters stated that a rough estimate of the reduction in GDP from lost productivity due to intellectual impairment from exposure to lead and methylmercury should begin with an annual measure of total labor output as a reflection of the value of what labor has produced. The commenters stated that total annual wa ges earned is a very conservative proxy for total labor output (because it excludes benefits, which are between one

- fourth and one

- third of wages, on average). The commenters stated that in 2013, total wages earned were slightly over $6 trillion. The comme nters stated that the intellectual capacity of America's future workforce could be a full standard deviation higher, and its workforce's annual production would increase by $9 trillion, if its future workforce were spared all exposure to just two neurotoxi ns

- methyl mercury and lead. The commenters stated that EPA conservatively estimates that the health care costs imposed on society as a whole from burning a ton of coal (which it calls the Social Costs of Carbon) would be $43 in 2020. The commenters state d that Social Cost of Carbon estimates indicate that the price of coal in 2020 would need to increase by from 82% to 105% if it were to cover its social costs. The commenters stated that if the external costs of coal were accounted for, they would double o r triple the price of coal. The commenters stated if electricity produced from burning coal were priced to cover its social cost, the price would go up by 9

- 27 cents per kilowatt.

Commenters stated that a strong state plan should encourage investment in en ergy efficiency as well as renewable sources of energy

- like solar, wind, biomass and geothermal and create local jobs that can't be exported, increasing demand for skilled workers such as electricians, heating341 and air conditioning installers, constructi on laborers and managers, and roofers and insulation installers. The commenters stated that by the end of 2014, the Missouri solar industry will have created more than 3,700 jobs and added $415 million to the state's economy in the last five years. The com menters stated that investments in wind energy would add millions of dollars in economic activity for Missouri while lowering electric bills. The commenters stated that offering energy efficiency programs is the cheapest way for utilities to meet electrici ty demand, far cheaper than building new power plants. The commenters stated that with a state plan that strongly emphasizes energy efficiency programs, Missouri is projected to add more than 3,900 new efficiency

-- related jobs over the next five years. The commenters cited a Brookings Institute report (Sizing the Clean Economy) that the estimated median wage for each clean economy job in Missouri is $38,401 compared to $34,265 for all Missouri jobs, and a clean economy job in Missouri produces $27,868 on av erage in exports. The commenters stated that the financial impacts of failing to reduce our carbon output will negatively impact Missouri businesses.

Commenters stated that U.S. manufacturers can be the leading global suppliers of cleaner cars, cleaner fu els, cleaner power, and technologies that improve industrial, power plant and building efficiency. The commenters stated that these initiatives will also serve to make our nation more secure by promoting geopolitical stability and helping to avoid resource shortages leading to confrontations and humanitarian crises resulting from climate disruption.

Commenters stated that the CPP would spur innovation and efficiency. The commenters stated that the Clean Power Plan sends a strong market signal to the privat e sector to increase investments in clean, renewable energy and energy efficiency. The commenters stated that in Colorado, where solar and wind resources are some of the most abundant in the nation, this means broad

- based economic growth and more jobs.

Com menters stated that we cannot afford not to regulate power plant emissions. The commenters cited the European Environment Agency (EEA), that air pollution in Europe cost society up to 189 billion euros (about US $235 billion) in 2012 alone. The commenters cited Clean Air Task Force estimates that air pollution from coal

- fired power plants accounts for more than 13,000 premature deaths, 20,000 heart attacks, and 1.6 million lost workdays in the U.S. each year. The total monetary cost of these health impacts is over $100 billion annually. The commenters stated that the Clean Power Plan supports growth in the energy efficiency and renewable energy sector, which gives an opportunity for economic growth that offsets expenses associated with implementation. The c ommenters cited the National Resource Defense Council's updated analysis that the benefits

-- in saved lives, reduced illnesses, and climate change avoided

-- far outweigh the costs, by $21 billion to $53 billion in 2020.

Commenters commented that increased renewable energy development will provide stable prices for electricity ratepayers, while expanding economic development throughout the West. The commenters observed first hand that renewable energy development has provi ded nearly 10,000 jobs in Colorado alone, and these jobs are often located in rural areas where the dollars generated are multiplied throughout the economy. The commenters remarked that renewable energy facilities pump hundreds of thousands of dollars into rural county government and school coffers, increasing the quality of life and providing diverse economic stimulus. The commenters stated that increasing the targets for renewable energy will provide a boost for Western states to better enable them to mee t these critical pollution reduction goals.342 Commenters stated that investment in renewable generation and energy efficiency can drive job creation. The commenters stated that the fuel savings of renewable resources and energy efficiency improvements will lower utility bills for families and businesses and those savings will be spent on other goods and services, stimulating local economies, as states with strong energy efficiency programs are already experiencing.

Commenters stated that energy efficiency a nd conservation are the fastest, cheapest, cleanest, and most reliable forms of energy resources. The commenters also stated that the job creation benefits of energy efficiency are significant; not only does energy efficiency create jobs doing the work of upgrading our infrastructure, the investments open up private capital to be reinvested in the economy, which has a multiplier effect on jobs.

Commenters stated that a popular measure is to estimate jobs per dollar invested. The commenters stated that in t he electricity space, a comparative analysis of efficiency compared to generation found that efficiency created twice as many jobs per dollar spent on nuclear power and 50% more jobs than coal and gas generation, and these large increases in economic activ ity lead to increases in employment. The commenters stated that the effect is magnified by the fact that the non

- energy sectors of the economy are substantially more labor intensive than energy production, and the energy sector is less than half as labor i ntensive as the rest of the economy. The commenters puts forward that this effect is compounded where energy is imported (as in the U.S. transportation sector), and as consumers substitute away from energy, the goods and services they purchase stimulate ec onomic and disproportionately large job growth. The commenters remarked that these efforts to model the economic impact of energy efficiency have proliferated with different models being applied to different geographic units, including states and nations. The commenters stated that the results differ across studies because the models are different, the impact varies according to the size of the geographic unit studied and because the assumptions about the level and cost of energy savings differ. The comment ers noted that these differences are not an indication that the approach is wrong; on the contrary, all of the analyses conclude that there will be increases in economic activity and employment, and given that there are different regions and different poli cies being evaluated, we should expect different results. The commenters stated that, taken together, the overestimation of costs and underestimation of benefits lead to a substantial and systematic underestimation of the net benefits of efficiency gains, and because the impact of the efficiency improvements depends on (a) the size of the improvement and (b) the type of consumer durable being studied, (c) the sector in which it occurs and (d) the region being analyzed, one cannot offer a single, simple esti mate. The commenters stated that the exact calculation of costs and benefits is likely to underestimate the benefit/cost ratio by a factor of at least two because of the failure to reflect the macroeconomic benefits and cost reducing trends, both of which are positive externalities of the adoption of performance standards.

Response 13 : Several commenters state that the benefits of the Clean Power Plan are overstated due to EPA’s failure to consider the negative health impacts associated with higher energy costs and unemployment. A number of other commenters conclude the benefits of the CPP are understated by EPA for a variety of reasons including:1) high costs associated with climate damages, 2) economic growth and jobs created with renewable and energy eff icient technologies, 3) increased revenues from economic growth for governments and school systems including rural communities from renewable and energy efficient technologies, 4) water savings associated343 with less carbon intensive power generating technol ogies, 5) enhanced national security from greater geopolitical stability by addressing climate change, and 6) greater productivity of labor due to increases in the intellectual capacity of the US workforce.

The benefits, costs and economic impacts of the f inal CPP are estimated in the Regulatory Impact Analysis (RIA) included in the docket. In the RIA, EPA finds that the benefits of the CPP far outweigh the costs of the CPP. While these estimates are illustrative of the benefits and costs that may result fr om implementation of the CPP, the EPA believes these estimates are reasonable estimates of the benefit and costs of the action. States will make the final determination through their state plans as to how the sources will need to comply with the CPP. Thus, the final benefits and costs of the guidelines may differ from those reported to the extent that state plans differ from EPA’s implementation assumptions in the RIA. The EPA discusses the climate and human health benefits of the CPP in Chapter 4 of the RI A, the estimated costs and potential changes in price of energy (e.g., electricity prices) are reported in Chapter 3, and employment impacts are presented in Chapter 6. As discussed in Chapter 3 of the RIA, electricity prices are anticipated to increase by less than one percent by 2030 on a nation wide average basis , while actual electricity bills may fall for consumers who invest in energy efficient technologies. Regional differences in projected electricity price changes are likely to occur as reflected in chapter 3 of the RIA. In chapter 6, EPA discusses possible job impacts of the CPP and concludes that certain jobs may be lost in specific sectors such as coal mining, but job gains are likely in the energy efficiency sector. Thus the impacts on electricit y prices and employment estimated by EPA do not match those assumed by the commenters that underlie their comment regarding negative health impacts. Further states will be able to address the economic interests of their utilities and ratepayers by using th e flexibilities in the final CPP to design their state implementation plans.

Regarding those commenters who believe EPA underestimated the benefits of the Clean Power Plan, EPA notes that Chapter 4 of the RIA presents the climate benefit estimates and a f ull discussion of the limitations in the SC

- CO2 analysis, e.g., the incomplete way that integrated assessment models capture catastrophic and non

- catastrophic impacts. See also Section 8.7.2, Comment 1, in the Response to Comments for EPA’s response to co mments regarding omitted impacts from the integrated assessment models. EPA also reports job growth estimates relating to renewable energy and energy efficiency. The EPA does not directly analyze possible changes in the general economic activity in the na tion in the RIA. However, the EPA does discuss potential impacts on secondary markets such as energy

- intensive manufacturing in Chapter 5 of the RIA. In EPA’s continuing effort to advance the evaluation of costs, benefits, and economic impacts associated with environmental regulation, EPA has formed a panel of experts as part of its Science Advisory Board SAB to advise the Agency on the technical merits and challenges of using economy

- wide economic models to evaluate the impacts of regulations that would p rovide estimates of change in general economic activity. The SAB panel of experts will consider a variety of issues related to the use of economy

- wide modeling. Answers from the panel of experts will help EPA assess economy

- wide economic impacts in the fut ure.
The EPA recognizes that less carbon intensive electric generation is generally less water intensive, but water usage was not directly analyzed in the RIA and actual changes in water usage will be dependent upon actual implementation of the CPP. (Plea se see http://www.epa.gov/cleanenergy/energy

- and

- you/affect/water

- resource.html for more details on water usage associated with different types of energy generation.) The EPA agrees that climate344 change impacts may create unstable situations throughout the world. See section II of the preamble of the final guidelines for more discussion of the impacts associated with climate change. Finally, any changes in intellectual capacity associated with the guidelines are not directly analyzed in the RIA.

Comment 14 : Communities and markets adversely affected need support.

Commenters stated that inclusion of mechanisms within the rule for labor and community adjustment assistance programs, or through federal legislation must be included. The commenters stated that u nions are threatened by the damaging losses to private and union

sponsored health and pension plans that would result from energy market dislocations.

Commenters stated that West Virginia can meet the goals of the Clean Power Plan and build a cleaner, mor e robust economy. The commenters stated that it will require leadership from all levels of government to ensure that America's coal producing states are not saddled with disproportionate compliance costs and economic burdens.

Commenters stated that there is a need for special consideration for the families and communities facing the negative consequences of the transition to a cleaner, low carbon energy system. The commenters stated that some regions of our country are facing a heavier burden than others i n accelerating the transition to a less fossil

- intensive electricity system.

Commenters stated that EPA considered regional differences in generation, fuel mix and public policy when setting state goals. The commenters stated the West Virginia has a 20% reduction target compared to the national 30% reduction target, and that integrating more natural gas, renewables, and energy efficiency resources with West Virginia's abundant coal resources will actually expand West Virginia's energy economy, support new jobs and provide consumers more control over their energy bills.

Commenters stated that states should help ensure that economic diversification and resources for worker transition are an important part of their plans, establishing a strong standard to pro tect the planet's climate, and ensuring that workers and communities have fresh economic opportunities, as market forces drive a shift away from coal.

Commenters stated that the current proposal does not do enough to secure maximum economic development po tential for rural communities. The commenters stated that a reduction goal of 26% in Nebraska falls short of the stringency needed to address the very real effects climate change is currently having on our ability to maintain a healthy economy in our rural communities. The commenters stated that if fully developed, wind power is capable of meeting more than 118 times the state's current electricity needs. The commenters stated that the flexibility granted to states does not necessarily provide sufficient mo tivation for Nebraska to fully develop one of the best wind resources in the country

. Commenters stated that Minnesota is on a clean energy path that is generally consistent with EPA's plan, and clean energy efforts in Minnesota have already resulted in s ome 15,000 jobs345 accounting for over $1 billion in annual wages. The commenters stated that EPA should work with states to help provide clean energy training opportunities where appropriate.

Commenters stated that water and wastewater utilities consume at least 1.8% of electricity nationwide and will face at least $414 million in increased electricity costs by 2020 due to the CPP. The commenters stated that an increase in the cost of electricity to water utilities from the CPP means that fewer funds will be available for other high priority activities (such as infrastructure repair) and/or that water and wastewater rates and charges will need to increase to offset the increased power cost. The commenters stated that a win

- win scenario of reducing the financi al challenges and furthering the overall goals of the CPP can be achieved by encouraging states to offer financial assistance/incentives to the water sector.

Commenters stated that the impact of higher natural gas pricing goes well beyond the cost of elec tricity however as many manufacturing industries use gas as a fuel or raw material and recommended that EPA include these secondary cost impacts to manufacturing, as well as the heating cost impact for commercial and residential natural gas users, in the e conomic impact assessment for the proposed rule. The commenters stated that between 2002 and 2011, natural gas used for electricity generation was four times as expensive as coal and the U.S. Energy Information Administration (EIA) projects real natural ga s prices to increase 31% between 2010 and 2030. The commenters stated that those states with lower energy cost structures will be most at risk for higher rate increases and most energy intensive manufacturing is also located in states with low energy cost structures. The commenters recommended that EPA allow states the flexibility to mitigate the impact on energy intense industries, including flexible incentives for energy efficiency or cost offsets for increased energy prices.

Commenters stated that the U .S. must be prepared to provide direct support to workers and communities in the form of wages, benefits, training, education and recognition, and resources for communities to redevelop its economy to assist in the energy transition. The commenters added t hat although implementation may result in a net job creation, support must be extended to utility and ancillary and support sectors, if and when a power plant shuts down to provide a proper transition.

Commenters stated that federal and state regulators m ust identify adequate funding sources for programs to assist workers and communities through training, wage benefits, expansion of existing economic development programs, and support for the development of new energy projects and technologies in communitie s most impacted. Commenters noted that while this historic shift in national energy policy will create new jobs in new industries, there is no guarantee that workers who may lose their existing jobs in coal

- related industries will be the beneficiaries of t hese new jobs. The commenters further recommended that the final rule encourage the states to conduct state

- specific job impact assessments in their State Implementation Plans and to provide detailed plans for mitigating any expected adverse impacts stemmi ng from implementation of the rule on dislocated workers and their communities. The commenters stated that any regulatory policy that transfers the full cost of compliance onto standard workers and communities is bad policy.

Commenters suggested that EPA e xplore ways to promote the creation of good jobs during the transformation of U.S. power industry to a cleaner electric power industry. The commenters346 stated that many workers now employed in certain parts of the energy sector will be displaced due to chan ges effected by this rule and steps must be taken to ensure that proper training, good benefits, family wage

- incomes and a net gain in jobs result from this rule.

Commenters stated that the federal government and the states should ensure that funding mech anisms are in place to support workers, as well as the communities whose livelihoods depend on fossil fuel

- fired power plants, through the transition process. The commenters stated that eight counties in southeastern Kentucky have been designated as a "Pro mise Zone" to channel federal grants and assistance from various federal agencies, including housing, education, economic development, agriculture, and safety. The commenters stated that a useful precedent to consider is the Worker and Community Transition ("WCT") program, a Department of Energy ("DOE")

- administered program that took place between 1994 and 2004 that targeted communities whose livelihoods were heavily dependent on the nuclear industry, and who faced displacement due to nuclear retirements. T he commenters cited DOE estimates that with the funds awarded to these communities, they created a total of 50,934 jobs at a cost of $5,719 per job. The commenters stated that the federal government should take a leading role to ensure economic opportuniti es at the regional level are available to these workers and their communities, particularly in states without a strongly diversified economic base.

Commenters stated that a just economic transition for coal workers and communities must be a central part o f any strategy to address climate pollution. The commenters stated that a meaningful approach should include a fund for displaced workers, increased support for entrepreneurs and businesses, and investment in promising sectors including energy efficiency, renewable energy, agriculture, tourism, sustainable forestry, arts and culture and health care. The commenters stated that utilities should be required to maximize energy efficiency before pursuing more costly strategies like fuel switching. The commenters stated that an aggressive plan to upgrade our homes, schools, public buildings, businesses and industries could save Kentuckians millions of dollars and generate thousands of good new jobs. The commenters stated that the Clean Power Plan should specifical ly encourage and incentivize implementation strategies that emphasize job creation and energy savings in our most economically distressed communities.

Commenters stated that while EPA estimates that there will be jobs created as a result of the proposed r ule in the renewables sector and through energy efficiency, it is also clear that there will be negative job impacts related to the proposed rule as well. The commenters stated further that it is, therefore, essential that well

- funded and consistent polici es that support the maintenance and creation of jobs are developed alongside this rule, and these include worker and community training and transition programs with the goal of ensuring that impacted workers and their communities have a secure place in our economy. The commenters asked for EPA's continued support in this area as our union and others work to develop solutions to this challenge.

Commenters urged President Obama and members of the Administration to ensure that workers displaced by CO2 reducti on policies are afforded re

- employment training.

Commenters stated that the coal mining industry, including union and non

- union workers, showed up in force at the Denver hearings on the draft plan. The commenters stated that hasn't347 any answers for these wo rkers concerned that climate efforts will cost them their jobs and livelihoods, resulting in suffering for their families and the decline of their communities. The commenters stated that they (the coal miners) acknowledged that the coal industry is much to blame for its failure to invest in clean coal technologies. The commenters stated that whatever is to be done, government needs to address the plight of these workers and coal

- dependent communities as part of our climate policies. The commenters suggested that some lessons might be drawn from the Pacific Northwest where logging economies are undergoing transformation. The commenters stated that all the mines won't shut down at once. The commenters also stated that listening and making resources available w ill go a ways towards making workers and families feel like somebody cares and they aren't just collateral damage, and policies should recognize that the labor force is not responsible for the industry's failure to retool or invest in its future.

Response 14 : Commenters assert that transition programs are needed in areas of the country that experience disproportionately high impacts due to the Clean Power Plan. Commenters discuss the need for special consideration for the families and communities facing th e negative consequences of the transition to a cleaner, low carbon energy system. A number of commenters stated that specific regions of our country will face a heavier burden than others in accelerating the transition to a less fossil

- intensive electricit y system. EPA recognizes that certain areas of the country may experience greater impacts than others. With regards to impacts associated with potentially higher electricity prices, the final rule ensures that bill

- lowering measures such as demand

- side en ergy efficiency (EE) continue to be a major compliance option. In addition, to ensure opportunities for communities, particularly citizens who could be impacted by decisions, to continue to participate in decision making, EPA takes steps to ensure that sta tes are actively engaging with communities as part of their public participation process in the formulation of state plans.

EPA plans to maintain regular contact/forums with states throughout the implementation process and to provide training and guidance . The EPA will continue outreach throughout the plan development and submittal process to provide states, local governments and affected communities with an understanding of the rule requirements, and to provide efficiencies where possible and reduce the c ost and administrative burden.

In section I X.C of the final rule preamble of the CPP, the EPA outlines programs that RGGI and the State of Maryland having been employing that assist low income communities in increasing their ability to access renewable energy, EE and financial assistance programs. The EPA encourages that states consider these approaches and other models in developing their plans. Additionally, as stated in the preamble, the EPA in the coming months, will continue to provide information resources for affected communities and states o n existing federal, state, local, and other financial assistance programs to encourage EE/RE that are already available to communities. The EPA will also provide a catalog of current or recent state and local programs that have successfully helped communit ies adopt EE/RE measures. The goal of these resources is to help affected communities gain the benefits of this rulemaking by encouraging that states use these types of tools in their state plans. In addition to providing resources to states, the EPA

encou rages states to be aware of existing efforts undertaken by other states aimed at providing low

- income communities access to financial and technical assistance programs for EE and RE, and to consider similar approaches that may make sense for their own stat es. There are also348 many federal programs that can help low

- income populations access the benefits of renewable energy, energy efficiency, and the economic benefits of a cleaner energy economy.

The EPA recognizes the potential impacts that this rulemaking could have on jobs in communities. Therefore, in section VIII.G of the final rule preamble, the EPA has outlined that states, in designing their state plans, should consider the effects of their plans on employment and overall economic development to reali ze the opportunities for economic growth and jobs that the plans offer. To the extent possible, states should try to assure that communities that may be expected to experience job losses can also take advantage of the opportunities for job growth or otherw ise transition to healthy, sustainable economic growth (e.g., with regard to delivering energy efficiency measures and installing rooftop solar panels). Additionally, as part of the resources that we will be providing to states and low

- income communities, the EPA will provide information on the White House’s POWER Initiative and other programs that specifically target economic development assistance to communities affected by changes in the coal industry and the utility power sector. 10

Comment 15 : Rules m ay have a negative or positive impact on the economy and economic growth.

Commenters stated that members of the local community cannot afford higher energy prices,that the members pay a disproportionately high percentage of their income for energy, and th at energy bills the can represent up to 71 percent of family incomes prior to energy assistance programs. The commenters stated that increased costs will slow economic growth, reduce job opportunities, and force families to make tough budget decisions.

Co mmenters stated that the proposed rule will increase energy costs and reduce the diversity of our nation's electricity supply and impede the nation's economic recovery and stifle future growth. The commenters stated that EPA estimates annual compliance cos ts between $5.4 and $7.4 billion in 2020, hitting $8.8 billion in 2030; but these numbers include only future power sector compliance costs, failing to capture the residual impacts of higher electricity rates on overall economic activity. Citing a recent W all Street Journal editorial and an HIS study, the commenters stated that raising the price of carbon energy will also raise costs across the economy, which will ultimately flow to consumers and businesses resulting in slower economic growth, job losses, a nd less disposable income. The commenters stated that the IHS estimates that the rule will result in an additional $289 billion in cumulative electricity payments by consumers from 2014 through 2030; a loss of 224,000 jobs on average through 2030; more tha n $50 billion in average annual GDP loss through 2030, with a peak GDP loss of nearly $104 billion in 2025; and from 2014 through 2030, a cumulative reduction of $586 billion in disposable income. The commenters stated that families will have less disposab le income as they spend more to light and heat their homes, with middle

- income and lower

- income Americans being hit the hardest. According to the commenters, in 2001, lower

- income households spent 16 percent of their after

- tax income on energy and in 2014, these households will spend 26 percent

10 http://www.e d a.gov/power/.349 of their budgets on energy (before taking into account any energy assistance programs). The commenters stated that lower

- income families are especially vulnerable because energy costs represent a larger portion of th eir budgets and reduce the amount of income they can spend on food, housing, health care, and other necessities.

Commenters stated that the 16 states in the Southern States Energy Board region currently produce over 50 percent of the U.S. energy supply, a nd $5 trillion of the nation's $16 trillion economic output with a commensurate number of high quality jobs in the manufacturing and agriculture sectors with much lower electricity rates and higher economic growth than states with self

- imposed carbon limit s.
Commenters stated that EPA did not conduct a rigorous cost/benefit analysis, and therefore has likely under

- estimated the costs to many states' economies. The commenters stated that the Regulatory Impact Assessment (RIA) did not incorporate the price r isk associated with increased reliance on historically price

- volatile natural gas. The commenters estimated that state GDP would be reduced by $2 billion with a ten percent increase in the cost of electricity. The commenters stated that the final rule shou ld include a "safety net" provision that would allow states that have increased exposure to natural gas price volatility to be able to dispatch their remaining coal

- fueled fleet, if doing so will offset rate impacts that exceed ten percent.

Commenters sta ted that EPA is essentially capping the amount of national electricity consumption in 2030. The commenters stated that the possibility of long

- term low

- to

- moderate prices of natural gas could lead to an industrial and manufacturing renaissance and signific ant increases in industrial consumption of electricity. The commenters stated that the nation must be careful not to impede this economic growth due to consumption targets that are essentially imposed by the EPA's proposal, and may have unintended conseque nces, including limiting economic opportunity for many Americans.

Commenters stated that by setting state

- by

- state goals for climate pollution reductions, the EPA is providing the states with the flexibility needed to develop innovative plans designed to spur job growth in the clean energy sector, lower consumer utility costs and improve health outcomes. The commenters noted that New York State is uniquely positioned as a leader on this front, and the state already has strict power plant carbon pollution s tandards for yet to be built plants and our participation in the Regional Greenhouse Gas Initiative (RGGI)

- and the successful clean energy and energy efficiency programs it has spawned

- are being showcased as a national model. Commenters stated that tod ay in the RGGI region, climate pollutant emissions from the power sector are more than 40

- percent lower than they were when RGGI was initiated in 2005. The commenters noted that new rules implemented in 2014, lowered the regional carbon cap by 45

- percent, locking in emission reductions already achieved and placing the region on a path to cut carbon pollution by an additional 10

- percent by 2018. Commenters further stated that the multi

- state initiative operates as a carbon cap and trade program, with power p lant owners required to purchase allowances for each ton of CO2 produced. RGGI allowance auctions have, thus far, generated over $1.84 billion. The commenters noted that those funds have been sent back to the states where they have been invested in a varie ty of consumer benefit initiatives, including energy efficiency, renewable energy, direct bill assistance, and climate pollution reduction programs. The commenters stated that New York has benefitted from nearly $700 million in auction proceeds, of which o ver $400 million has been allocated to renewable power,350 efficiency and clean energy technology and market innovation programs

- creating jobs, lowering consumer costs and driving further reductions in emissions. The commenters estimates that to date, RGGI programs have provided energy bill savings and other benefits to more than 130,000 households and 2,500 businesses spanning all of New York State's 62 counties.

Commenters stated that with 63,896 employees, the combined employment impacts of the coal indu stry, associated transportation and power generation industries account for 11.3 percent of employment by private industry in West Virginia. The commenters stated that at $6 billion, the combined direct impacts amount to nearly 9 percent of GSP and includi ng the multiplier effect of spending by these industries and households employed by the industry, the impact amounts to $8.8 billion or 12.7 percent of GSP. The commenters stated that taxes paid by the coal industry are estimated at $638 million in 2012, i ncluding property taxes, severance taxes, workers' compensation, net income, and personal income taxes paid by industry employees and others

. Commenters cited research at the University of Nebraska

- Lincoln that coal as a generating resource for electricity , combined with its transportation, primarily by rail, generates about $4.9 billion in output, including $1.4 billion in labor income, and more than 22,800 jobs for the state.

Commenters stated that solar power systems are expected to generate more than 2 0,000 GWh in 2014, and in the Southeast alone, there is nearly one gigawatt of solar capacity currently operating. The commenters stated one GWh of solar generation eliminates 690 metric tons of CO2 emissions; across the nation, solar generation is expecte d to avoid 13.8 million metric tons of CO2 emissions in 2014. The commenters stated that solar technologies consume no fuel, thereby shielding customers from the fuel price volatility risks associated with fossil fuel generation. The commenters stated tha t solar photovoltaic consumes no water, and solar energy provides substantial air and water quality benefits. The commenters stated that the 515 MW of new utility scale solar for which Georgia Power Company is currently seeking PSC approval were offered at an average price of less than 6.5 cents per kWh, well below utility's avoided costs

- providing, in the utility's words, "overwhelming benefit" to customers in the form of cost savings. The commenters stated that solar power investments create jobs and in crease economic investment. The commenters stated that there are nearly 143,000 Americans working in the solar industry, a 20 percent increase since 2012 and that there are now more Americans working in the solar industry than mining coal.

Commenters stat ed that Federal regulations have already forced two plants in his district to close over the last two years. The commenters cited a National Mining Association projection that more than 300 plants would retire nation

- wide due to EPA rules over the next six years. The commenters cited a Heritage Foundation study predicting that the EPA's anti

- coal policies could terminate 600,000 American jobs by 2023 while causing economic growth to drop by more than $2 trillion.

Commenters stated that under the proposed g uidelines, EPA projects that its proposed Clean Power Plan will increase electricity prices by a nationwide average of 4 percent to 7 percent, will increase natural

- gas prices by 9 percent to 12 percent, and will cause the retirement of 46,000 megawatts to 49,000 megawatts of coal

- fueled electric

- generating capacity. The commenters stated that the EPA's proposal will have a major impact on energy resources, electric ratepayers, jobs, and the economy of the Midwest region.351 Commenters stated the Plan callo usly disregards the impact of increased energy costs that have a domino impact on every step in the supply chain resulting increased costs of our goods and services, reduced competiveness and job losses.

Commenters stated that as plants close or scale bac k operations, the loss of jobs and tax income in communities across the region will be a significant blow to the economy.

Commenters stated that EPA's analysis of the employment impacts of the Proposed Rule was arbitrary and capricious because EPA only ev aluated employment impacts in a few select industries. The commenters stated that EPA's partial economy model failed to address impacts in the communities that support coal

- fired electricity generation and on consumers of electricity. The commenters state d that a whole economy model must include employment across a wide range of sectors, sufficient detail at the regional level to identify changes in the regional distribution of output and employment, international trade flows to evaluate how regulations wi ll affect tradable sectors and dynamic analyses to examine adjustments in labor and capital markets in response to regulations over time.

Commenters stated that manufacturers rely on secure and affordable energy to compete in a tough global economy, and t hat manufacturers' recent gains are largely due to the abundance of affordable energy we now enjoy. The commenters stated that manufacturers across CSX's 23

- state network, have invested more than $14 billion in rail

- served facilities, creating more than 1 4,000 jobs over the last five years. The commenters stated that in 2013, $3 billion in customer investments generated more than 1,600 new job opportunities. The commenters stated that economic productivity and environmental progress could be undermined by the Proposed Rule and EPA's failure to analyze foreseeable economic impacts.

Commenters stated that a shift away from coal will significantly increase the cost of electricity, and that in turn will have a very significant cascading impact on GDP. The comm enters stated that that increased costs of electricity will translate into fewer jobs for Americans in all sectors of the economy.

Commenters cited a study by the Heritage Foundation that EPA's energy regulations would cost hundreds of thousands of jobs a nd cause a significant decline in personal income while having a minimal impact on global warming. The commenters stated that these regulations would reduce aggregate gross domestic product by more than $2.5 trillion between now and 2030, and employment wo uld track nearly 300,000 jobs below the no

- carbon

- regulation baseline in an average year, with some years seeing an employment deficit of more than 1 million jobs. The commenters cited a NERA study estimating that the costs to comply with EPA's proposed p lan could total $366 billion, or more and finds that 43 states will have double

- digit electricity price increases.

Commenters stated that the primary concern of the IUOE is that the regulation could cause job loss for its members, eliminating high

- quality , family

- sustaining jobs, which could affect broader swaths of the economy and drag down overall economic performance.

Commenters stated that the drastic reduction in coal generation will cost 52,000 direct and 100,000 indirect jobs. The commenters stated that MATS and the CPP will close 40% of the coal352 generation that exists today, and eliminate 400,000 or more irreplaceable American jobs. The commenters stated that under the CPP Colorado will not receive credit for plant closures already made and will be forced to close at least three additional coal

- fired plants. The commenters stated that in at least 22 other states the impact of the CPP will not be limited to the coal sector.

Commenters estimated that roughly 6% of its members will lose their jobs if the Clean Power Plan is finalized in its current form. The commenters stated that local power plants provide jobs for hundreds, and often times, thousands of workers. The commenters stated that the CPP will influence the cost of electricity for residents and businesses, impacting regional growth, employment, taxes, and wages. The commenters predicted that more than 500 coal

- fired power plants will be shut down, and 41GW

- 49GW of coal

- based electric generating capacity would be closed by 2020.

Commenters st ated that during the period 2001

- 2013, while its energy costs escalated, California lost 650,000 manufacturing jobs

-- approximately one

- third of all California manufacturing jobs. The commenters stated that 34 percent of the nation's welfare recipients live in California. The commenters stated that California has shown the disastrous consequences of abandoning coal as an energy source and pushing jobs for the working class out of its borders, often to Mexico and other countries. The commenters stated that th at Missouri is at the crossroads between the South and Midcontinent Independent System Operator power regions, which are expected to incur "over half the U.S. total costs during the 2014

- 30 timeframe," and "will shoulder more of the economic consequences o f compliance."

Commenters stated that Americans will be hit repeatedly with higher prices as businesses pass higher costs onto consumers. The commenters stated that if a company had to absorb the costs, high energy costs would shrink profit margins and pr event businesses from investing and expanding. The commenters stated that cutbacks result in less output, fewer new jobs, and less income. The commenters stated that the impact of a revenue

- neutral carbon tax starting at $37 per ton in 2015 through 2030 wo uld be substantial, including an average employment shortfall of nearly 300,000 jobs; a peak employment shortfall of more than 1 million jobs; 500,000 jobs lost in manufacturing; an aggregate GDP loss of more than $2.5 trillion (inflation

- adjusted); and a total income loss of more than $7,000 per person (inflation

- adjusted). The commenters stated that the Energy Information Administration (EIA) has analyzed the economic impact of a $25/ton carbon tax using essentially the same model and found more than $2 t rillion in lost GDP from 2014 to 2030 and a peak employment differential of 1 million lost jobs.

Commenters stated that in Utah, coal

- fueled electricity is responsible for meeting approximately 80% of the state's energy needs, and it is crucial that Utah maintains the economic development competitiveness that coal provides. The commenters stated that the coal mining industry is one of the most important industries in the State of Utah, due not only to the number of jobs supported by the coal industry, but also to the economic linkages with other sectors of the economy and the high wages in the mining industry relative to other sectors of the Utah economy. The commenters stated that these high

- paying coal mining jobs are located in a rural part of the state in which it would be difficult, if not impossible, to replace them.353 Commenters stated that the CPP will drive manufacturing and jobs out of state and overseas. The commenters stated that the proposed rule will impose costs on U.S. businesses in numerous w ays without meaningfully reducing global GHG emissions.

Commenters stated that the proposed rule will create jobs. Commenters supported the Clean Power Plan and stated that it will save jobs, help protect farming, fishing, forestry and other rural resources undeniably impacted by carbon pollution, and reduce th e job

- killing impacts of carbon pollution. The commenters further stated that the solar energy employs roughly twice as many people as the coal mining industry, and added that other renewable resources also add jobs.

Commenters also supported the Clean Po wer Plan because it provides an opportunity for more research, manufacturing and construction jobs, more efficient and less costly energy, cleaner air, improved health outcomes and more.

Commenters stated that the potential positive impacts of capping car bon pollution in Colorado could add $622 million to the economy and create over 9,000 jobs.

Commenters stated that there are significant benefits in addition to GHG emission reductions that can be achieved with energy efficiency programs and that energy e fficiency programs can be deployed at a level consistent with EPA's assumed levels for the fourth building block. The commenters stated that in Rhode Island, 544.73 full

- time equivalent (FTE) employees had work in 2013 as a result of its investments in ene rgy efficiency programs to electricity and natural gas customers, and since most of those jobs were tied to installations at customer homes or businesses, the jobs were grown locally.

Commenters stated that compliance with the Clean Power Plan will genera te additional jobs and spur business growth in North Carolina. The commenters cited an analysis prepared by ICF International, Inc. for the Natural Resources Defense Council, the Clean Power Plan can create approximately 6,700 jobs in North Carolina. The c ommenters stated that there are now more Americans working in the solar industry than are currently working as coal miners.

Commenters stated that the RIA does not capture various indirect employment impacts and provided an economy

- wide assessment of the rule's impact on employment that captured the employment impacts of the rule not only for directly affected industries (similar to EPA) but also for industries that may be indirectly affected by the rule. The commenters estimated that the GDP and employmen t effects of the rule are small but positive. The commenters stated that by 2025, total employment would increase by more than 200,000 and increase by 263,000 by 2040. The commenters stated that the increases in electricity efficiency brought about by the rule represent increases in multi

- factor productivity, which stimulates the economy by raising its potential supply (how much output can be produced with given resources). The commenters stated that the efficiency investments are a cost to some industries and consumers, but represent increased demand for the industries producing the goods and services necessary to accomplish those investments. The commenters stated that reductions in electricity demand have negative impacts on employment and investment in t he electric power industry, as well as on output and jobs in the coal and gas producing industries. The commenters estimated that carbon emissions would fall to 5104 million tons by 2040 under the proposed rule, compared with 5710 million tons in the refe rence case, with most of the reduction is in the electric power sector.354 Commenters stated that three years after Missouri's Renewable Energy Standard was enacted, there were over 68,000 clean energy related jobs in the state. The commenters stated that th e solar industry alone in Missouri supports 3,700 jobs statewide

. The commenters stated that with the added influence of the EPA's Clean Power Plan this number is sure to grow and have a positive impact on Missouri. The commenters stated that raising Misso uri's goal of 21% by 2030 and including strong standards for enforcement will only help grow Missouri's economy and keep our workforce employed. The commenters stated that lowering the rate of unemployment in Missouri will increase the tax base and reduce the number of people filing unemployment claims, creating an insurgence of funds for schools, parks, libraries, roads, and other necessary areas of public spending in the state. The commenters stated that Missouri will benefit greatly from reducing its rel iance on out

- of

- state coal. The commenters stated that Missouri spends $1.6 billion importing coal from surrounding states and does not mine any of its own fuels. The commenters stated that the Farmers City Wind Power Project in Atchison County is a 146

me gawatt wind farm that created 150 jobs during construction, generated up to $1 million in local tax revenue, and pays $365,000 annually to the landowners who leased their property to the wind developer

. The commenters stated that in Holt County, Missouri, another $400 million project is expected to come online in 2015, creating another 300 jobs in rural Missouri and lessening our reliance on imported coal

. Commenters stated that the cost of doing nothing is far greater than that of the CPP, exceeding the c apacity of local communities and our economy. The commenters stated that the expansion of energy efficiency and renewable energy generation will spur economic growth and create jobs in installation and maintenance which cannot be outsourced abroad.

Commen ters stated that the Clean Power Plan rule will boost bottom lines and help create jobs as states look to comply with the standards and achieve reductions through various measures. The commenters supported the compliance flexibility inherent in the rule. T he commenters cited an American Council for an Energy Efficient Economy (ACEEE) report finding that energy efficiency investments alone could increase national gross domestic product by $17.2 billion in 2030, and produce a net gain of about 611,000 jobs, w ith all 50 states seeing net job creation, all
at no net cost

. The commenters stated that a review of the Northeast's Regional Greenhouse Gas Initiative (RGGI) program by the Analysis Group found that over the first three years, the program created more th an 16,000 additional jobs with each of the 10 states showing net job additions. The commenters stated that 56 percent of small business owners still support EPA's regulations even if it would cause utility rates to rise. The commenters stated that small bu sinesses are strategically positioned to help states achieve their carbon reduction goals, igniting job creation opportunities and cost savings along the way. The commenters stated that business opportunities exist with respect to modernizing inefficient p ower plants and buildings as well as operation new, cleaner and more efficient power plants; conducting energy audits and retrofitting residential as well as commercial buildings to be more energy efficient; and developing new and innovative technologies t hroughout the supply chain. The commenters stated that ACEEE conducted an analysis and found that by 2030 the rule could induce over $625 billion of investment in various energy efficiency industries and behaviors, and create an average of over 400,000 job s per year both directly and throughout the economy

. The commenters cited an Analysis Group report that while the Regional Greenhouse Gas Initiative (RGGI) program costs initially increased electricity rates, the impact of energy efficiency investments (us ing RGGI allowance revenues) significantly reduced commercial and residential355 electricity use, placing downward pressure on rates over time, and combined with lower consumption, tended to generate on average much lower electricity bills

.
Commenters stated that the exponential growth of renewable energy is both a cause and a product of rapidly falling costs. The commenters stated that as the renewable energy market has increased in scale, costs have come down. The commenters stated that wind and solar costs have come down at a much faster rate than conventional sources and as the renewable energy market continues to increase in scale, even more cost reduction is a confident expectation. The commenters stated that the wind

- power industry employs over 80,000 w orkers in the U.S., a number that can double with the right policies. The commenters stated that the U.S. solar industry employed 142,698 Americans as of November 2013, a 19.9% growth in employment since September 2012

. The commenters stated that the geothe rmal industry supports over 20,147 jobs

. The commenters stated that America's biomass and waste

- to

- energy industries provide 25,000 jobs nationwide

. The commenters stated that energy storage systems (ESS) technologies are key to addressing the variability of renewable resources not managed by intelligent systems by allowing power to be stored and then deployed as needed, thereby foregoing the need for fossil

- fuel powered back

- up generation facilities, and ESS could also provide critical backup power to the grid in times of peak usage or outages without the need for fossil

- fired backups. The commenters stated that the Department of Energy has set a conservative estimate of 5 GW of new storage by 2022 and expects the ESS industry to grow by several billion dol lars. The commenters stated that others have found that the potential for 47 GW (including 25 GW of battery storage) of ESS by 2030

. Commenters stated that the U.S. has an estimated 3.4 million clean jobs as of 2013

- a number which is steadily growing

. Th e commenters stated that in the last two years it has tracked nearly 600 clean energy and clean transportation project announcements that could create more than 210,000 jobs when completed. The commenters stated that over the last four years, wind generati on has doubled and solar capacity has grown by a factor of five

, and both have reduced costs by close to 40 percent. The commenters stated that the Clean Power Plan will accelerate this growth if designed to maximize private and public investment. The commenters stated that since 2008, the states participating in RGGI g ained more than $1.6 billion in economic value, consumers saved $1.1 billion on electric bills, and over 16,000 jobs were created.

Commenters stated that jobs created by renewable energy resources nationally reflect the significant job creation potential of renewable energy compared to coal

- fired power with the wind industry employing 80,000 and the solar industry employing over 140,000 people, a total of over 200,000 people compared to about 130,000 people employed nationally at coal mines and coal

- fired power plants. The commenters stated that this impressive considering that solar and wind makes up about 8 percent of the electricity generation in the U.S (75 gigawatts), compared with the 40 percent currently generated by coal (310 gigawatts); on average, solar and wind generation employ a little over twice as many people per megawatt as coal generation. The commenters stated that if carbon emissions from coal are reduced and renewable energy potential developed, the state will reap significant economic, j ob, public health, and climate benefits.

Commenters stated that EPA should consider the costs to manufacturers, consumers, and the economy against the limited benefits to the environment when proposing rules and regulations.356 The commenters stated that bus iness and consumers are not opposed to the programs that benefit the environment, but oppose efforts that produce an undue burden on the economy.

Commenters stated that the proposed rule does not sufficiently allow for population growth, or economic growt h. The commenters stated that the proposed rule will result in higher natural gas prices and therefore electric rates to customers, which in turn may stifle growth.

Commenters stated that natural gas fired electric generation throughout the United States will far exceed that which EPA anticipates in its CPP and that prices will spike as a result of the CPP The commenters stated that natural gas

- fired generation in Oklahoma will more than double by 2020, which will place significant upward pressure on natur al gas commodity and transportation prices

. The commenters stated that the EPA has failed to fully assess the direct and substantial indirect impacts the CPP will have on the economy as well as the day

- to

- day functioning of society thereby disregarding the se price impacts.

Commenters cited the U.S Chamber of Commerce's estimates on increases in electricity costs ($17 billion increase annually, $289 billion by 2030), losses in disposal annual income ($3,400.00 decrease in typical household annually, $586 bi llion by 2030), losses in investments and GDP (over $50 billion annually), and increases in compliance costs for electricity providers ($28 billion annually, $480 billion by 2030). The commenters also cited the Heritage Foundation's estimates that aggregat e GDP losses would reach $2.23 trillion by 2023. The commenters further stated that EPA's estimated $5.5 billion annual compliance cost is unrealistic. Additionally, the commenters stated that low income families and fixed

- income seniors would be dispropor tionately affected and that compliance costs would be passed on to consumers or shareholders in the form of reduced return on investments.

Commenters stated that the proposed rule would result in a myriad of economic impacts. Commenters cited the followin g economic impacts associated with the proposed plan: increased cost of electricity, increased price volatility, decreased grid reliability, increased costs and uncertainty associated with securing natural gas transmission rights, and the potential for fin ancial harm to electricity association members if coal power is curtailed.

Commenters proposed that implementation of the rule would cause serious economic harm, reduce energy diversity, increase electricity prices, jeopardize grid reliability, result in major job losses, hinder coal technology advances and fail to achieve the administration and EPA's goal of global leadership on CO2.

Commenters expressed concern that the rule would substantially increase electricity and natural gas costs, create liabilit y problems, put the manufacture sector at risk, and reduce good paying jobs with relatively small global climate impact. The commenters cited EPA"s estimates that the proposed rule would reduce 730 million metric tons of carbon by 2030 but then stated that China increased its emissions nearly that same amount in one year.

Commenters stated that the Clean Power Plan goals, building blocks, and modeling demonstrate that some regions of the country will be more dramatically impacted by the GHG emissions requi rements, and the SSEB region is one such example. The commenters stated EPA needs to357 consider the economic health of the region and its impact on the vibrancy and security of the national economy.

Commenters stated that nuclear plant construction can be viewed as SCE&G's plan for reducing carbon emissions by reducing the need for new coal plants and enabling older coal plants to be retired. The commenters stated that the cost to consumers for this private utility effort to "reduce carbon emissions" has be en an increase in rates of 11.82 percent since 2009, and additional rate increases are expected. The commenters stated that South Carolina consumers, residential and commercial, have seen a 37 percent hike in electricity rates in the last 5 years. The co mmenters stated that South Carolina has the fastest growing economy on the East Coast and the lowest unemployment rate in six years. The commenters stated that heavy investments in alternative energy can be done without hurting the economy, even when elect ricity rates increase dramatically, and that high

- paying construction jobs created by investing in nuclear energy have helped South Carolina's economy. The commenters stated that these investments in alternative energy will protect us from the future nega tive effects of climate change that are guaranteed to hurt our economy and cost jobs.

Commenters stated that the cost estimates fail to reflect or capture the subsequent adverse spillover impacts of higher electricity rates on our nation's overall economi c activity. The commenters cited an analysis by NERA Economic Consulting indicating that average U.S. electricity prices would increase by 12% per year and the total costs of the rule could be between $366 billion and $479 billion over a 15

- year timeframe

. The commenters stated that many of these costs will have to be absorbed by residential, commercial and industrial energy consumers. The commenters stated that higher energy prices disproportionately harm low

- income and middle

- income families. The commente rs stated that the Proposed Rule would result in a direct loss of 52,000 jobs in the electric utility, mining and rail sectors due to plant closures. The commenters stated that an additional 100,000 indirect jobs are at risk for loss in communities affecte d by the closures, and that job losses would be concentrated in, "relatively poor, rural areas that are least able to afford the loss of high

- wage skilled jobs."

Response 15 : Commenters said that economic growth in the US would be negatively impacted for a variety of reasons. These reasons included impact on household’s energy costs, higher energy costs, plant retirements, and higher prices. Other commenters think the rule will enhance the economy and lead to economic growth. Reasons given for higher gr owth include higher energy efficiency, higher employment potential o f renewable energy as compar ed to coal production, and renewable energy leading to falling costs.

The EPA did not quantitatively estimate impacts of the Clean Power Plan on national econom ic growth. Economic growth will be enhanced in some sectors and diminished in others. Without quantitative estimation of growth it is not possible to address the net effect on growth. One potential approach to address the rules impact on economic growth is to use a computable general equilibrium (CGE) model or economy

- wide model. CGE models are able to provide aggregated representations of the whole economy in equilibrium in the baseline and potentially with regulation in place.358 When considering the eco nomic impacts of a regulation both the effects of the costs, the benefits of improved air quality, and their interaction may be relevant. Therefore, in the Second Prospective Analysis under Section 812 of the Clean Air Act Amendments the EPA incorporated

a set of health benefits arising from air quality improvement into the EMPAX CGE model when studying the economy

- wide impacts of the Clean Air Act. While the external Council on Clean Air Compliance Analysis (Council) review of this study stated that inclus ion of benefits in an
economy

- wide model “represent[ed] a significant step forward in benefit

- cost analysis”, the EPA recognizes that serious technical challenges remain when attempting to evaluate the benefits and costs of potential regulatory actions usi ng economy

- wide models.

In light of these challenges, the EPA has established a Science Advisory Board (SAB) panel on
economy

- wide modeling to consider the technical merits and challenges of using this analytical tool to evaluate costs, benefits, and econ omic impacts in regulatory development. The panel will also be asked to identify potential paths forward for improvements that could address the challenges posed when economy

- wide models are used to evaluate the effects of regulations. The final panel memb ership was announced in March 2015 and the first of multiple face

- to

- face meetings of the SAB panel has been scheduled for October 2015. The EPA will use the recommendations and advice of this panel as an input into its process for improving benefit

- cost

a nd economic impact analyses used to inform decision

- making at the agency.

Comment 16

. Commenters stated that biomass is sustainable and provides economic benefits.

Commenters stated that the historical standing biomass stocks in the U.S. are evidence that biomass is a sustainable and carbon neutral feedstock that adapts to new markets. The commenters stated that biomass, when properly managed, maintains supply volume s. The commenters stated that Biomass removals in the South more than doubled between 1952 and 2006 and biomass supply (i.e. growing

- stock volume) also increased during this time period.

Commenters stated that the inclusion of forest

- derived biomass feeds tocks in the Clean Power Plan creates economic development opportunities across many sectors and throughout the supply chain. The commenters stated that an increase in biomass feedstocks coming from sustainably managed forests would provide economic stimul us and job growth beginning with the individual forest owner and carrying through the logging, transportation and electricity generation industries.

Commenters stated that biomass co

- firing in the U.S. Southeast is estimated to create 6 times the jobs los t from reduced coal demand, due to the increased labor needed for biomass supply chains. The commenters stated that a 500MW coal plant supports 2,540 direct jobs, while a 500MW biomass plant supports 3,480 jobs.

Commenters stated that bioenergy is a costl y way to "reduce" CO2 emissions as biomass power plants are expensive to build and require substantial and ongoing infrastructure investments. The commenters stated that bioenergy is substantially more expensive than onshore wind, per kilowatt

- year, includ ing both the initial infrastructure investment and ongoing fixed and variable359 costs. The commenters stated that replacing some coal with low levels of biomass co

- firing may result in stack CO2 increases.

Commenters stated that using technology such as bio mass, waste, landfill, landfill gas for energy projects create more emissions than coal fire power plants. The commenters said that these emissions could include dioxins, PCBs, cadmium and arsenic, and that these co

- pollutants are just as or more harmful t han CO2. The commenters said that a plan to address other toxic pollutants should also be developed.

Response 16: Commenters stated that biomass is sustainable and may provide economic benefits. Other commenters stated that bioenergy is a costly way to re duce CO 2 emissions. Biomass is not considered part of the best system of emission reduction in this rule and therefore it is not included in goal

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

For more information regarding Building Block 3, refer to s ection V.E of the final rule preamble. A discussion regarding the use of some biomass feedstocks for compliance purposes can be found in Section VIII.I.2.c and Section VIII.K.1 of the preamble.

Commenters also asserted that using technologies such as biomass, waste and landfill gas for
energy pr ojects create more toxic emissions than coal

- fired power plants and that a plan to address other toxic pollutants should be developed. Toxic air emissions are addressed under current programs develo ped by EPA pursuant to Title I of the Clean Air Act.

Co mment 17 : Commenters discusses the impact methane leakage will have on greenhouse gas emission reductions estimated by the CPP.

Commenters stated that the benefit/cost ratio is overwhelmingly positive under the proposed state standards, implying that the p roposed state standards should be raised. The commenters stated that prior to the announcement of the Clean Power Plan, PacificCorp (which is the corporate owner of Utah's electric utility Rocky Mountain Power) already planned to reduce the share of its po wer produced from coal from the current 62% to 46% by 2024, which is a 29% reduction. The commenters stated that the implication is that Rocky Mountain Power will surpass the carbon emission's reduction target assigned by the Clean Power Plan well before 2 030 for reasons that are unrelated to the proposed Clean Power Plan, which suggests that the emissions

- rate reduction target that the EPA has assigned to Utah under the Clean Power Plan is so lenient that it gives PacificCorp no additional incentive to red uce its already

- planned emissions. The commenters stated that recent studies of the rate of fugitive methane emissions from fracked natural gas in the Uinta Basin found that it was 9% of all gas produced

. The commenters stated that over a 20

- year time fram e, a pound of methane is 72 times more powerful at increasing the retention of heat in the atmosphere than a pound of CO2. The commenters stated that it is estimated that fugitive methane accounts for up to 8% of all gas produced from shale, and if true, electricity produced from burning shale gas would warm the globe as much as producing electricity from coal. The commenters stated that the Clean Power360 Plan must take into account the risk that shifting from coal to natural gas may not, in fact, reduce
gre enhouse gas emissions overall.

Response 17 : The EPA assessed whether the net change in upstream methane emissions from natural gas and coal production is likely to be positive or negative and also assessed the potential magnitude of changes relative to CO 2 emissions reductions anticipated at power plants. This analysis found that the net upstream methane emissions from natural gas systems and coal mines and CO 2 emissions from flaring of methane will likely decrease under the proposed guidelines. Furthermor e, the changes in upstream methane emissions are small relative to the changes in direct emissions from power plants. The technical details supporting this analysis can be found in the Appendix to chapter 3 of the proposal and final RIA and response to com ment 18 in section 8.2

.

Comment 18 : The Clean Power Plan emission guidelines will not achieve the targeted CO2 reduction goals.

Commenters proposed that implementation of the rule would cause serious economic harm, reduce energy diversity, increase electr icity prices, jeopardize grid reliability, result in major job losses, hinder coal technology advances and fail to achieve the administration and EPA's goal of global leadership on CO2.

Commenters expressed concern that the rule would substantially increa se electricity and natural gas costs, create liability problems, put the manufacture sector at risk, and reduce good paying jobs with relatively small global climate impact. The commenters cited EPA"s estimates that the proposed rule would reduce 730 milli on metric tons of carbon by 2030 but then stated that China increased its emissions nearly that same amount in one year.

Similarly, commenters stated that the proposed regulations are likely to increase worldwide greenhouse gas emissions by decreasing the international competitiveness of U.S. businesses due to increased energy costs and moving businesses to areas with less efficient and more carbon intensive energy supplies. The commenters further stated that under this proposal the total cost of the produ cts produced in the U.S. will need to increase, eroding our international competitiveness and resulting in the loss of U.S. manufacturing jobs, despite businesses investing in cost effective energy savings activities for decades.

Commenters stated that u nder the CPP leakage is likely to occur on a national level and also on a state level, and that New York and New York facilities will be at a significant disadvantage. The commenters stated that energy

- intensive trade

- exposed (EITE) industries require a le vel playing field to prevent GHG leakage. The commenters stated that total industrial sector electricity costs would rise from about $65.1 billion in 2013 to 165.6 billion in 2030, a 154 percent increase.

Commenters stated that EPA has not attempted to un derstand and quantify the economic or environmental impact of the GHG leakage that would result from the proposal. The commenters stated that steel is traded globally, so if American manufacturers experience costs that our overseas competitors do not, Amer ican steel producers will sell less product and overseas361 competitors will sell more. The commenters stated that there are significantly more GHG emissions involved in shipping scrap from America across the oceans to Turkey or China and producing steel ther e with high GHG emitting electricity generation. The commenters stated that manufacturers in states with higher CO2 emission targets than Virginia will have lower compliance costs, creating an incentive for companies to move or expand operations in states with less expensive, higher CO2 emission targets, and that this will create perverse economic incentives between states.

Commenters stated that the domestic coal

- based electric power industry will have invested $145 billion through 2016 to achieve these e mission reductions; and the U.S. electric sector emits four percent of global greenhouse gas emissions and, as a consequence, unilateral actions by the U.S. will not have a meaningful effect on climate change; and policies to reduce CO2 emissions are likel y to increase energy costs; and increases in energy costs have a disproportionately greater impact on minority families, fixed and low

- income consumers and minority owned businesses. The commenters then urged EPA and the Administration to ensure that its g uidelines and other policies to reduce greenhouse gas emissions minimize costs, do not cause employment losses, support advancements in fossil fuel technologies such as carbon capture and storage, and do not cause increases in energy prices that will harm low

- income electric consumers, minority families and minority businesses.

Commenters discussed the potential for job losses as a result of the rule. Commenters stated that EPA failed to meaningfully consider employment impacts of Clean Air Act regulations by not using whole economy modeling that would have captured a much more accurate picture of the likely job losses from this proposal. The commenters further stated that EPA failed to undertake an employment analysis under Section 321A of the Clean Air Ac t, which requires the continuous review of potential job losses and shifts in employment due to the implementation of the act. Commenters stated that the onslaught of overregulation and lack of certainty in the coal industry has contributed to the loss of 7,000 coal jobs since President Obama took office as opposed to the increase in 3,500 coal jobs that occurred in the previous administration according to EIA and Kentucky Energy and Environment Cabinet. Commenters stated that the proposed rule will lead
to the closure of coal

- burning power plants and the loss of more than 52,000 jobs in the coal, utility and railroad industries by 2020, and an additional 65,000 job losses by 2030. Commenters further stated that the proposed rule will lead to direct and indi rect employment losses of over 208,000 jobs by 2030. Commenters urged the EPA to withdraw its proposal for new emissions regulations on the basis of the direct job losses in the coal industry, the indirect economic impacts to communities as a result of coa l industry overregulation, and the lack of overall environmental benefit. The commenters cited EPA's emission reductions assessments and stated that the proposal will result in a meaningless 1 percent reduction in atmospheric CO2 concentrations, an insigni ficant reduction in global average temperature of 0.016 degrees Fahrenheit. The commenters noted that a study will be conducted by DMME and CCER (no abbreviation definition provided) to report on the effect of increased energy prices on lower income popula tions and the negative economic impacts to coal country, including job loss, in order to show how damaging these new regulations are to the economy. Commenters also stated that all of the public forums have been far from coal country, making it prohibitive for those affected to speak to their plight.362 Commenters cited a study by the Heritage Foundation that EPA's energy regulations would cost hundreds of thousands of jobs and cause a significant decline in personal income while having a minimal impact on gl obal warming. The commenters stated that these regulations would reduce aggregate gross domestic product by more than $2.5 trillion between now and 2030, and employment would track nearly 300,000 jobs below the no

- carbon

- regulation baseline in an
average y ear, with some years seeing an employment deficit of more than 1 million jobs. The commenters cited a NERA study estimating that the costs to comply with EPA's proposed plan could total $366 billion, or more and finds that 43 states will have double

- digit electricity price increases.

Commenters stated that the proposal will result in higher electricity prices and cited the U.S. Chamber of Commerce that "Upon full implementation in 2030, the carbon reduced from this massive and costly regime would offset t he equivalent of just 13.5 days of emissions from China."

Commenters stated that if electricity and natural gas costs rise because of a state's implementation plan, industrial GHG leakage will shift GHG emissions to either other states or to a foreign cou ntry. The commenters stated that a cost safety valve would allow states the flexibility to complete a cost impact analysis on an annual basis and determine what revisions are necessary to limit cost increases to less than 2 percent in future years.

Commen ters stated that in 2010, the GHG emission intensity of the U.S. economy, was 31% below the worldwide average and 67% below that of nations that are not part of the Organization for Economic Cooperation and Development. The commenters stated that policies that substantially increase the cost of energy will cause in investments and emissions to be sent to other, less efficient countries with higher CO2 emissions intensities and could actually result in a net increase in global emissions. The commenters stat ed that for every ton of CO2 reduced in 2030 as a result of the proposed rule, the rest of the world will have increased emissions by more than 16 tons.

Commenters stated that the projected CO2 emission reduction from EPA's proposed rule is, at most, 555 million metric tons (mmt) in 2030, which represents only 1.3 percent of projected global CO2 emissions in that year. In 2030, the reductions proposed by this rule would offset the equivalent of just 13.5 days of CO2 emissions from China. The commenters sta ted that the existing cost/benefit calculation for the proposed rule does not adequately reflect this structural imbalance of penalizing US economic growth while the economic growth of developing countries continues unfettered.

Commenters cited the Brooki ngs Institution that "standard benefit

- cost practice sums the benefits across the political jurisdiction consisting of the citizens who are bearing the costs of the policy". The commenters stated that foreign entities that do not bear a share of the burde ns of a given policy "should not have [economic] standing within a benefit

- cost analysis of a U.S. regulation," and foreign benefits should therefore be excluded.

Commenters stated that the projected CO2 emission reduction from EPA's proposed rule is, at most, 555 million metric tons in 2030, which represents only 1.3 percent of projected global CO2363 emissions in that year. The commenters stated that this reduction in 2030 would offset the equivalent of just 13.5 days of CO2 emissions from China.

Commenters stated that the projected CO2 emission reduction from the proposed rule is, at most, 555 million metric tons (mmt) in 2030, which represents only 1.3 percent of projected global CO2 emissions in that year. The commenters stated that this reducti on in 2030 would offset the equivalent of just 13.5 days of CO2 emissions from China. The commenters stated that the EPA's economic analysis grossly overstates and overestimates the benefits of the proposed rule, and underestimates the burdens and translat ed costs on businesses and those they serve. The commenters stated that EPA has failed to convene a Small Business Advocacy Review panel and failed to conduct a regulatory flexibility analysis to evaluate the proposed rule's impact on small businesses, as required by the Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act. The commenters stated that the term "social cost of carbon" is not recognized as a legitimate economic metric or methodology and has not received general

ac ceptance or even legitimate scrutiny necessary for a transparent rule

- making. The commenters stated that "co

- benefits" have not been confirmed attributable to this rule and should not be considered as sufficient evidence to support the rule's effectiveness

. Commenters stated that the Agency resorted to methods of calculating costs and benefits that are unacceptable, and that did not follow the requirements by the 111(d) of taking of costs of compliance into account. The commenters said that the cost

- benefi ts analysis have three structural defects: 1) its use of foreign benefits to justify domestic costs; 2) its reliance on alleged

co

- benefits, especially reductions in emissions of fine particulate matter (PM2.5); and, 3) its failure to account for "carbon l eakage," which is the risk that energy

- intensive domestic industries will move plants and activities abroad in response to EPA finalizing its proposed rule. http://www.washingtontimes.com/news/2014/jul/29/gray

- a

- costbenefit

- analysis

- from

- epa

lacking

- in

- c/p rint/. (Please see section 8.7.2, comment 3 for EPA’s response to comments on the use of global SCC estimates and section 8.8 for response to co

- benefits from PM2.5 reductions.)

Commenters added that EPA's cost

- benefit analysis fails to account for inevita ble "carbon leakage" that will occur in response to higher electricity prices and off

- shoring of electric demand and consumption to countries with lower costs and higher emission rates than within the U.S. The commenters added that EPA must estimate these likely significant new emissions and subtract them from their estimated benefits.

Commenters stated that EPA's regulations will impose billions of dollars in costs on the U.S. economy but fail to meaningfully reduce CO2 emissions on a global scale. The co mmenters stated that the projected CO2 emission reduction from the proposed rule is, at most, 555 million metric tons (mmt) in 2030, which represents only 1.3 percent of projected global CO2 emissions in that year. The commenters stated that this reduction in 2030 would offset the equivalent of just 13.5 days of CO2 emissions from China

. Commenters stated that EPA's estimates project that this rule will cause nationwide electricity price increases averaging between six and seven percent in 2020, and up to 12 percent in some locations, and also estimates annual compliance costs between $5.4 and $7.4 billion in 2020, rising up to $8.8 billion in 2030. The commenters concluded that these substantial power sector compliance costs do not capture the subsequent adverse spillover impacts of higher electricity on364 overall economic activity, and the comprehensive financial impact for business, manufacturers and residential customers should be better understood and analyzed before this rule is finalized.

Commenters stated that SCC is widely acknowledged that these cost estimates are inaccurate,
uncert ain, and highly speculative. The commenters added that the current methodology for assigning a cost to carbon is based on a global value and therefore is both inconsistent with OMB guidance and EPA assessments of costs, which are only on a U.S. basis. The commenters urged EPA to recalculate climate benefits solely on the domestic carbon value. The commenters also provided an example of how the evaluation skews the results by discussing IPM modeling and stating that increased electricity and natural gas pric es as a result of the rule could shift manufacturing overseas, which could result in increased global CO2 emissions that have not been quantified by the proposed rule . Commenters stated they have concerns with the current methodology on SCC that have been previously submitted.(Please see 8.7.2 for EPA’s response to comments relating to the SCC.)

Commenters stated that in 2020, the average annual West Virginia household electricity and gas bills will increase by $750

- a 38% increase

- and the total annual cost of power and gas in West Virginia will grow from $2.7 billion to over $4 billion. The commenters stated that in 2020, the average annual U.S. household electricity and gas bills will increase by $680 in 2020

- a 35% increase

- and the total annual cost of po wer and gas in the U.S. will grow from $475 billion to over $750 billion. The commenters stated that U.S. compliance costs could total upwards of $366 billion, with 43 states facing double

- digit electricity price increases, and CO2 concentrations would be reduced by less than one

- half of a percent, which would result in reducing the average global temperature by less than 2/100th of a degree and reducing the sea level by 1/100th of an inch. The commenters stated that EPA has failed to consider adequately
t he potential economic impact of its Proposed Rule due to the rise in electricity prices. The commenters cited NERA's conclusions that the rule would cost at least $41 billion per year, and under one scenario, $73 billion per year, with a total projected co st of $366 billion to $479 billion over a 15

- year period. The commenters stated that the Proposed Rule would cause 43 states to see a double

- digit electricity rate increase, and that nationwide, the proposal would cause a 12% to 17% average increase in ele ctricity prices. The commenters stated that fourteen states face peak year electricity price increases that could exceed 20%.

Commenters stated that it is concerned about the increased electricity costs that a re

- dispatch of the power market could precipi tate. The commenters stated that electricity cost increase estimates that range from 7% to 17% and that regional costs can significantly as in the New England area over the past winter, where lack of transport coupled with regionally higher demand and litt le supply caused spot market pricing fifteen times over normal regional pricing and twenty times over pricing nationally. The commenters stated that local road blocks to innovation such as those raised against coastal wind farms clearly demonstrate that sw itching to alternate energy sources will not be easily or quickly implemented. The commenters stated that as a manufacturer in a global marketplace, competitive pressures are high and increasing production costs in one region of the world can shift product ion to other regions with lower costs, which will not decrease global carbon emissions.365 Commenters stated they believe that it's the EPA's responsibility to determine environmental policy and our nation's role in addressing climate change, however, he do es not believe that it is the EPA's role to set energy or economic policy as this rule clearly does.

Commenters stated that the only way to have a meaningful impact in climate change would be
to require the full cooperation of nations like China and India

. Commenters stated that without their participation and commitment, this rule will accomplish

no measurable results in the global perspective and will only serve to harm our nation's economic and electric reliability

. Commenters stated opposition to this proposal as it punishes electricity consumers, has no material benefit under climate theory.

Commenters stated, EPA's central rationale for promulgating the proposed New Source Rule

- that the proposal will protect public health and address climate chang e

- is entirely eliminated by EPA's own concession that the proposal "will result in negligible CO2 emission changes, quantified benefits, and costs by 2022." 79 Fed. Reg. 1,430, 1,433. See States' Comment Letter at 10

- 11.

Response 18 : Commenters state d t hat the Clean Power Plan emission guidelines will not achieve the targeted CO 2 reduction goals due to leakage on national and state level. The EPA discusses state level leakage extensively in the preamble for the final rule. See section VIII.J of the
pream ble for this discussion, as well as, remedies to avoid this phenomenon in state planning. See Chapter 5 of the RIA for a discussion of secondary market impacts for industry including energy intensive industries.

Several commenters contend that unilateral a ctions by the US will not achieve the CO 2 reduction goals desired. These comments compare reductions in the CPP to emissions of other countries. The EPA believes final CPP is an important step towards achieving the GHG emission reductions needed to addre ss the serious threat of climate change. The CPP constitutes a major commitment by one of the world’s largest GHG emitters. Fossil fuel

- fired EGUs are by far the largest emitters of GHGs among stationary sources in the U.S. These emissions are primarily in the form of CO 2 , and, among fossil fuel

- fired EGUs, coal

- fired units are by far the largest emitters. Climate change is a global problem, and the United States is not alone in taking action to address it. The United Nations Framework Convention on Clima te Change (UNFCCC) 11 is the international treaty under which countries cooperatively consider what can be done to limit anthropogenic climate change and adapt to climate change impacts. Currently, there are 195 Parties to the UNFCCC , including the United St ates. The Conference of the Parties (COP) meets annually and is currently considering commitments countries can make to limit emissions after 2020. The 2015 COP will be in Paris, and countries will announce their post

- 2020 commitments there or beforehand. In April 2015, the United States announced its commitment to reduce GHG

11 http://unfccc.int/2860.php366 emissions 26

- 28% below 2005 levels by 2025. 12 See section II.F. of the preamble for the final rule for further discussion of agreements made by countries such as China to reduce greenho use gases.

Comment 19 : EPA needs to pursue a balanced approach that considers climate change and related benefits and economic impacts.

Commenters stated that more than one billion people do not have access to electricity and if we can provide cheap, reli able, and accessible energy for these people, their living standards will increase and economic development will increase

- creating more jobs, improving education and helping provide a better way of life. Commenters stated we have to balance our environment al concerns, which are critically important, with improving living standards and making the world a better place to live. The commenters stated that fossil fuels are an important part of that sustainable solution.

Commenters stated the Proposed Rule is de signed to reduce utilization of sources with high

carbon intensity, which includes coal

- fired generation. The commenters stated that the continued operation of coal

- fired generating units in North Dakota is contingent on whether there is sufficient demand for electricity and available renewable generation to allow North Dakota to meet its emission rate goal.

Commenters stated that assuring affordable, reliable and secure energy is as important as addressing the climate change issue for the simple reason tha t a healthy, growing economy is essential to having the wherewithal to address climate change. The commenters stated that actions to address climate change must be balanced against their potential economic impacts.

Commenters requested that EPA seriously consider issues associated with the overall socioeconomic cost of the proposed rule.

Commenters stated that sensible policies and regulations for controlling greenhouse gases must also consider the real economic impacts on the individual states that are tasked with implementing the regulations. The commenters stated that these regulations and policies should also consider the opportunities presented by developing technologies in renewables and energy efficiency that create additional jobs and technologica l investment, and that EPA must carefully balance these concerns in its final rulemaking product.

Commenters stated that we cannot afford inaction. The commenters further stated that the costs from intensified hurricanes and tornados, drought, wildfires, and agricultural impacts are immense and continue to mount. The commenters stated humans need to be able to survive and

12 United States Cover Note to Intended Nationally Determined Contribution (INDC). Available online at: http://www4.unfccc.int/submissions/INDC/Published%20Documents/United%20States%20of%2 0America/1/U.S.%20Cover%20Note%20INDC%20and%20Accompanying%20Information.pdf367 not continue losing other species to extinction. The commenters noted that the financial cost of inaction is staggering as well. The com menters provided a local example of an historic flash flood in Oct. 2013 in Austin, Texas that resulted in $30 million in losses, according to FEMA. 548 homes and businesses were lost; there were dozens of rescues and 4 people were killed; Onion Creek rose 11 feet in 15 minutes and crested at a record 41 feet; Travis County's uninsured claims cost $28 million; the volume of water was 120,000 cubic feet per second, double the force of water from Niagara Falls. The commenters explained that the emergency offi cials were thrown off because they had endured a drought for so long, and it overwhelmed their resources. The commenters remarked that they cannot afford the cost of ongoing extreme weather events, the devastation drought, or the loss of lives.

Commenters stated that States will play a key role in preparing state plans to meet the federal requirements. The commenters stated that the rule will have far

- reaching impacts on electric utility resource planning, reliability and costs

- all of which ultimately im pact residential, commercial and industrial customers.

Commenters also stated that the proposed plan will fundamentally alter the way that electricity is generated and how Americans use electricity.

Commenters stated that significant greenhouse gas reduc tions have been achieved. The commenters stated that determination of the path forward in which additional reductions are achieved requires a careful consideration to the limits of available technology, the costs associated with various reductions strategi es, the impact to the business community's ability to comply and bear such costs, and current and future global economic and environmental trends.

Commenters stated that the market should determine what solutions are viable. The commenters stated that the economic assumptions made by the EPA in developing these rules are unsubstantiated and that the EPA did not consider Florida

- specific policies and circumstances when establishing Florida's emission goals.

Commenters stated that if electricity and natural gas costs rise because of a state's implementation plan, industrial GHG leakage will shift GHG emissions to either other states or to a foreign country. The commenters stated that a cost safety valve would allow states the flexibility to complete a cost im pact analysis on an annual basis and determine what revisions are necessary to limit cost increases to less than 2 percent in future years.

Commenters suggested that the proposed rule does not strike a balance between climate change goals and economic imp acts such as job losses, trade balances, and costs of electricity, goods and services. Commenters stated that policies must ensure that low and fixed income consumers are not disproportionately impacted and further suggested that all sources of GHG and eco nomic sectors should be included in initiatives to reduce emissions. Commenters urged the EPA to think about the economic calamity we face around the world if the lights went out, if electricity became too costly for families who are struggling to pay thei r bills every month or seniors who spend more time in their homes than most but cannot afford excessive heating or cooling bills. The commenters stated that businesses rely more than ever before on electric power to boot their computers, charge their techn ology and power equipment to be successful.368 Response 19: Commenters stated EPA needs to pursue a balanced approach that considers climate change, as well as other socioeconomic factors. Commenters contend ‘assuring affordable, reliable and secure energy is as important as addressing the climate change issue for the simple reason that a healthy, growing economy is essential to having the wherewithal to address climate change.’ The EPA believes that it has taken a balanced approach to develop the final CPP. EPA has considered the impacts climate chang e is currently having and potentially will have in the future on the environment and human health. As discussed in the final rule preamble, the May 2014 report of the National Climate Assessment 13 con cluded that climate change impacts are already manifesting themselves and imposing losses and costs. The report documents increases in extreme weather and climate events in recent decades, with resulting damage and disruption to human well

- being, infrastru cture, ecosystems, and agriculture, and projects continued increases in impacts across a wide range of communities, sectors, and ecosystems . The commenters stated that actions to address climate change must be balanced against their potential economic impa cts. The EPA addresses the costs of the final guidelines in section I of the preamble. The EPA assessed the costs, benefits and economic impacts of illustrative compliance scenarios for the CPP in the Regulatory Impact Analysis (RIA). The final rule RIA sh ows that the benefits to society of the CPP far outweigh the costs. See the final rule RIA in the docket for more information on the cost and benefits of the CPP for illustrative implementation scenarios

.

Comment 20 : Commenters stated that electric bills will go down as a result of the CPP.

Commenters stated that although the cost per MWh of power could increase by about 9 percent, the drop in electricity consumption due to energy efficiency would push total system costs down by 3 percent, or about a bill ion dollars a year in 2029.

Commenters cited a Synapse Energy Economics report that North Carolina customers will save $201 to $348 million dollars each year in 2030 and beyond by complying with the Clean Power Plan. The commenters stated that these savin gs result from the use of energy efficiency and renewables to displace the higher operating and fuel costs of existing fossil plants. The commenters stated that these benefits do not include additional benefits such as job creation, economic growth, and im provements to public health and welfare resulting from lower carbon dioxide emissions.

Commenters cited a facility

- level study of Midwest pulp and paper mills that found that facilities could save $240 million per year in total energy costs by improving t heir performance to existing, ENERGY STAR levels, and that these efficiency

- derived savings could help preserve the 370,000 jobs associated with Midwest pulp and paper mills.

Commenters stated that long

- term contracts for wind power generation are cost co mpetitive with all other potential energy generation sources and in many states can lower electrical bills for

13 U.S. Global Change Research P rogram, Climate Change Impacts in the United States: The Third National Climate Assessment, May 2014. Available at http://nca2014.globalchange.gov/.369 utility customers. The commenters cited studies done for the Midwest Independent Systems Operator (MISO) that increasing wind power generation wo uld reduce power costs by $3B to $9.4B, or between $63 and $200 per customer per year

. The commenters cited a New England Independent Systems Operator wind integration study modeling a 14% increase in its footprint that found electricity prices dropped aro und 10%, and further that a 24% increase in wind generation would send prices down by about 15%

. The commenters cited a study done by Syracuse University and the University of California finding that wind energy comes within .35 cents per kWh when levelize d over the 20

- year life of a typical wind contract

. The commenters stated that historically natural gas prices are very volatile and despite recent low natural gas prices the long

- term hedge dimensions of wind power purchase agreements show the value of
st ates having diverse energy generation portfolios. The commenters cited the American Wind Energy Association review of 15 independently done studies on wind power generation impacts on the energy market finding a strong correlation between the amount of win d deployment and electricity cost reductions to users. The commenters stated that this analysis found that the 11 states that get more than 7% of their electricity from wind energy have seen electric prices decrease by 0.37% over the past five years, in co ntrast all other states have seen electricity prices increase by 7.79% during that time.

Commenters stated that although the EPA projects that the Clean Power Plan would lower consumer electricity bills by 8.4 percent by 2030 due to efficiency measures, t he Plan could be far more consumer

- friendly. The commenters stated that the Plan overstates the costs and understates the potential for energy efficiency, which is the least

- cost, most effective, and most

consumer

- friendly strategy for curbing carbon emiss ions. The commenters stated that it also overstates the costs and understates the potential for renewables. The commenters stated that the Plan promotes increased electric generation from natural gas, even though the climate benefits of switching from coal to natural gas are uncertain due to methane emissions and, setting aside the methane issue, soon we must incur the expense of phasing out natural gas due to its carbon emissions. The commenters stated that natural gas prices are projected to increase 23 p ercent by 2030 even without the EPA spurring additional demand for natural gas. The commenters stated that the Plan also includes nuclear power, which carries exorbitant costs that consumers typically must subsidize through their utility bills.

Commenters stated that reducing the carbon emission rate of Montana's electric generation mix will result in additional renewable energy and energy efficiency which are less expensive for Montana consumers. The commenters stated that power from Colstrip Unit 4 at 6. 8 cents is consistently more expensive on a per kilowatt

- hour basis than wind power from the Judith Gap wind farm at 3.4 cents or the Spion Kop wind farm at 3.3 cents. The commenters stated that energy efficiency is always the least expensive source of ene rgy and actually saves consumers' money. The commenters stated that according to a third party analysis of NWE's energy efficiency investments, energy efficiency has saved their customers over $75 million between 2007 and 2011 which is over $125 per custom er. The commenters stated that the average levelized cost of the saved energy was 1.6 cents per kilowatt

- hour, compared to coal

- fired power from Colstrip Unit 4 at over 6 cents per kilowatt

- hour. The commenters stated that Montana Dakota Utilities' 20 mega watt Cedar Hills wind project was about $55 per megawatt

- hour (MWh), and that there were opportunities for it to purchase wind energy for a 25 year period for about $30 per megawatt

- hour

. The commenters stated that wind power purchase agreements in the int erior of the U.S. (which includes Montana) averaged about $25/MWh.370 Commenters stated that in Utah as elsewhere, they are currently experiencing growing impacts of climate change, not only on the availability of their natural resources but also on their he alth and quality of life. The commenters stated that the proposed system of emission reduction under the Plan includes flexibility along different fronts to help states achieve their compliance obligations. The commenters stated that the plan has the poten tial to drive innovation both in the development of advanced/cleaner technologies as well as smart policies. The commenters stated that renewable energy and energy efficiency (building blocks 3 and 4, respectively) present the country with enormous yet lar gely untapped potential for carbon emission reductions. The commenters stated that the Clean Power Plan can tap into this potential by making greater use of these abundant, non

- polluting and efficient power resources, while also affecting the deployment of new technologies and improving financing opportunities.

Commenters stated that if the externalities associated with electricity produced by burning coal are considered, the cost of alternative energy including wind and solar are already less costly than continuing to burn coal. The commenters said the cost of electricity from large wind farms is already at or below the cost of electricity from coal without considering external costs associated with coal and that these things would be reason enough on thei r own for the Clean Power Plan or even something that reduces use of coal more and faster.

Commenters cited Epstein et al., 2011 conclusions that the social cost of coal

- fired power could be as high as 60 percent of residential electricity prices and a pr esentation by Peterson (2012) statements that when adjusted to account for social, health and environmental costs and benefits, solar energy becomes even more cost

- competitive.

Response 20: Commenters indicate that energy efficiency and renewable energy ar e cost competitive and offer benefits to communities. Some commenters contend that the costs are overstated and benefits understated for the CPP. These commenters further assert that electricity bills for consumers may be less than those estimated by EPA. As shown in the Regulatory Impact Analysis for the final rule, EPA estimates that electricity prices on average nationwide with increase somewhat by 2030 (less than one percent) with the CPP. EPA agrees that investment in energy efficient technologies and practices has the potential to decrease energy consumption and consumers’ bills may be reduced as well. It is important to note that the electricity price change projection results are based upon illustrative scenarios of state implementation plans and ac tual impacts may differ depending upon the actions taken by sources to comply with the CPP. The flexibility afforded to states in developing their state plans allows them to encourage compliance methods which include design elements that may mitigate or
pr omote particular impacts based on their priorities. Thus states may choose to promote energy efficiency and renewable energy in their state implementation plans. The EPA also agrees that renewable energy and energy efficiency are advantageous clean energy choices. In addition, the EPA expects that there will be opportunities as enumerated by commenters in the renewable energy and demand

- side energy efficiency sector s

.

C omment 21 : Commenters stated that energy efficiency programs increase electric rates and impacts may be underestimated.371 Commenters stated that energy efficiency programs tend to increase delivered prices because the upfront utility costs of energy efficiency programs are recovered through delivered prices on remaining generation in the ye ar they are incurred, and fixed transmission and distribution costs are spread over fewer electricity sales (because energy efficiency reduces end

- use electricity sales).

Commenters stated that EPA did not endogenously determine how much of the assumed en ergy efficiency supply would be adopted as part of a least

- cost response to the regulation. The commenters stated that this approach does not allow the analysis to indicate whether some or all of the potential energy efficiency programs would be cost

- effec tive even in the absence of the CPP. The commenters cited NewERA model findings that all of that energy efficiency would be
cost

- effective to adopt in the baseline scenario, even if the consumer would be given no subsidy by the utility. The commenters stat ed that the combination of EPA's decision to exclude energy efficiency from the analytic baseline and assumptions that might understate the cost of energy efficiency introduces potential distortions in the modeling. The commenters stated that by netting

an alytically questionable energy efficiency savings against the other costs, the potential impact to the economy is likely understated.

Commenters stated that the CPP's EE targets for Ohio are based on electricity consumption levels that include customers w ho may become non

- participants under Ohio's EE programs and that this would both increase costs and shift those higher costs associated with EE to the remaining ratepayers, and is contra to Ohio law.

Commenters stated that EPA has drastically underestimat ed these costs and has attempted to disguise the true costs under the umbrella of elements like EE, but EPA has not been able to determine the actual cost of this proposal.

Commenters stated that the argument that energy efficiency measures that states imp lement as part of their compliance strategies would result in small or negative changes to electricity bills is based on a host of unrealistic assumptions, but if this analysis were true economy

- wide, it is unlikely to be the case for major industrial ener gy users such as Caterpillar, because energy costs are such a significant component of its cost structure. The commenters stated that the Proposed Rule is unlikely to significantly impact the rate or level of energy efficiency that Caterpillar is able to i mplement and EPA should not assume that, for industrial energy users such as Caterpillar, higher electricity prices would be offset by greater energy savings achieved through new energy efficiency programs. The commenters stated that increased expenditures of utility

run energy efficiency programs are generally passed on as higher electricity rates, especially to industrial customers. The commenters stated that such price increases would translate into higher costs for companies such as Caterpillar that hav e not been accounted for in EPA's economic analysis.

Commenters cited EPA estimates that employment could increase between 57,000 and 78,800 jobs, rely on a jobs multiplier with no basis in reality. The commenters stated that EPA concedes, "Employment imp acts of demand

- side energy efficiency programs have not been extensively studied in the peer

- reviewed, published economic literature." The commenters cited EPA's use of a multiplier of 2.56 energy efficiency jobs per million dollars of spending, or $390,62 5 per job. The commenters stated that the earnings for the median worker are $30,454. The commenters372 stated that EPA's multiplier of $1 million in investment to create 2.56 jobs strains credibility, and compares it to the work of Richard Morgenstern, who f ound that $1 million in environmental spending translates into roughly 1.5 new jobs. The commenters stated that EPA also relies on models of green investment spending in states, which multiplied by EPA's 2.56 jobs per $1 million in investment, yields rough ly 78,800 jobs, meaning that the nation will spend more than $30.7 billion on energy efficiency investments by 2020. The commenters stated that this figure is not contained in EPA's RIA, but instead EPA claims from $8 billion to $12.3 billion "demand

side" energy efficiency costs by 2020. The commenters stated that EPA underestimates demand

side costs by threefold, and that a similar extrapolation for 2030 costs would approach $150 billion. The commenters stated that EPA's multiplier is significantly higher than past estimates and $30 billion in energy efficiency spending by 2020 is three times what EPA reports.

Commenters stated that the proposed rule will force consumers to pay for both the initial investment in energy efficiency resources, as well as the backup generation required when energy efficiency fails to perform. The commenters stated that despite EPA's claim that energy efficiency savings will offset the tens of billions in energy efficiency costs, energy efficiency is widely recognized as an unr eliable resource and the expected displaced generation from more carbon

- intensive resource simply will not materialize. The commenters cited a PJM Interconnection staff proposal that limits eligibility for the enhanced Capacity Performance product within i ts existing capacity market structure to energy efficiency resources that can achieve full reduction 365 days per year and penalizes energy efficiency resources that do not achieve the required level of load reduction.

Commenters stated that providing an aggressive level of demand side management (DSM) would increase the cost per KWh would by an average of 15 percent moving from 1.5 percent gross to net savings. The commenters cited an EnerNOC report which concluded that under a recommended scenario it was not possible to meet the Indiana state goals (per the 2009 Phase II Order) in any year.

Commenters stated that they are intimately familiar with the challenges that today's energy bills pose to the health and well

- being of our communities. The commenters stated further that it is typical to find that their clients must spend as much as 8 percent of their annual income on electricity alone, while the average for households that are not low

- income is less than 4 percent.

The commenters also stated that the low

- income families and individuals they serve are disproportionately likely to carry arrears on their utility bills and to face utility disconnection, and to avoid such a calamity, they typically sacrifice good nutrition and medical care to meet their re nt and utility obligations. The commenters explaind that utility bills of the same size differ dramatically in their impact on family well

- being and health. The commenters stated unaffordable energy leads to a cascade of health risks from poor nutrition, e rratic medication purchase and the threat of eviction, in addition to the dangerous possibility of disconnection from electricity. Further, the commenters stated that utility program expenditures are biased towards those who can share the costs out of pock et, and at present the vast majority of utility efficiency investments in their state are set up to match a small share of a larger, private consumer expenditure on new equipment or a building upgrade. The commenters noted that while their clients pay for these programs in their bills, they are excluded because the requirement for personal spending to access a benefit is unaffordable.373 Commenters stated that EPA uses "compliance costs as a proxy for social costs." and that this cannot be a valid measure of the losses to the coal industry and dependent localities. The commenters stated that it cannot be assumed that increased electricity costs will not be experienced as economic friction with lasting, and cumulative, negative consequences. The
commenters stat ed that projected decrease in consumption is not historically demonstrated. The commenters stated that claims that the demand aspect of EPA's BSER findings is demonstrated for Option 1 is based on state programs that are hedged to insure that cost and reli ability are not held hostage to state targets, and EPA does not identify any jurisdiction where such ambitious ultimate targets have been sustainably achieved.

Commenters stated that investor owned utilities (IOUs) in North Carolina have actively develope d EE programs under the incentives provided in North Carolina, and yet their history indicates that the EPA goals of a 1.5% annual incremental rate and a 10.3% annual cumulative rate by 2029 far exceed the past achievements of EE savings. The commenters s tated that the EE savings achieved to date place North Carolina in the "middle of the pack" when compared to other states.

Commenters stated that within regulated utilities, any fuel

- cost savings which might be created through efficiency improvements woul d have to be returned to the power consumer, otherwise known as the rate base, and this makes any efficiency improvement project have an automatic negative return on investment, and such projects never see the light of day. The commenters suggested that EP A encourage the states to allow some or all of the financial benefits from efficiency improvements and CO 2 reductions to remain with the utility, so that a positive ROI is possible, and can then be used as justification for the necessary capital projects w hich will have to be undertaken.

Commenters stated that the assumed levelized cost of saved energy (LCSE) is too high. The commenters stated that both ACEEE and Lawrence Berkeley National Laboratory (LBNL) have studied the cost of saved energy and LBNL reported an average LCSE of $21 per MWh saved, considering program administrator costs only (i.e., not including participant costs). The commenters stated that ACEEE reported an average levelized cost of $28 per MWh and a median cost of $26 per MWh, again only considering program costs. Th e commenters stated that ACEEE found a weak correlation (r value of 0.27) between cost of saved energy and level of energy savings achievement.

Response 21: Commenters assert that demand

- side energy efficiency (EE) will increase electricity prices and impacts are understated. Commenters further took issue with the approach EPA used to model demand

- side energy efficiency and EPA’s inclusion of demand

- side energy in the Best System of Emission Reductions (BSER). Commenters urged the EPA to confine its BSE R determination to actions that involve traditional generation. While some stakeholders recognized demand

- side EE as being an integral part of the electricity system, with many of the characteristics of more traditional generating resources

, other stakehol ders did not. The EPA has not included demand

- side EE as part of the final BSER determination. Thus, neither the final guidelines’ BSER determination nor the emission performance rates for the two subcategories of affected EGUs take into account demand

- sid e EE.374 However, many commenters also urged the EPA to allow states and sources to rely on demand

side EE as an element of their compliance strategies, as energy efficiency measures are in widespread use across the country and provide energy savings that re duce emissions, lower electric bills, and lead to positive investments and job creation. EPA agree s , and the final guidelines provide ample latitude for states and utilities to rely on demand

- side EE in meeting emission reduction requirements. Since commen ters pointed out that the utility power sector operates over regional interconnections that are not constrained by state borders, the BSER determination and the resulting source category

- specific emission performance rates take into account that reality. T he final guidelines’ BSER determination takes into account recent reductions in the cost of clean energy technology, as well as projections of continuing cost reductions. EPA also updated the underlying analysis with the most recent Energy Information Admi nistration (EIA) projections that show lower growth in electricity demand between 2020 and 2030 than previously projected. D ue to these revised findings, EPA expect s the final guidelines will be more conducive to compliance, consistent with an energy strat egy that allows for the cleanest generation and greater reductions in 2030 than the proposal. With a revised start date for emission reductions of 2022, instead of 2020, as proposed, the guidelines reflect that the additional time aligns with the adoption of lower

- cost clean technology and thus its incorporation in the BSER at higher levels. At the same time, the 2022

- 2029 interim period will more easily allow for companies to take advantage of improved clean energy technologies as potential least cost opti ons. See Section V of the final rule preamble for more information.

As discussed, states may incorporate demand

- side energy efficiency in their state implementation plans and sources may use EE for compliance purposes. However, the final guidelines’ BSER nor the performance rates take into account demand

- side EE. The EPA does however consider demand side EE in its illustrative scenario that represents EPA best estimate of the approach states may take to design their implementation plans. This analysis and discussion is presented in chapter 3 of the Regulatory Impact Analysis (RIA) and in the GHG Mitigation Measures Technical Support Document. The EPA recognizes that states may design plans that differ from the illustrative scenario presented in the RIA and that reflects plans best suited to the needs of individuals in their particular state.

Comment 22 : Commenters state that renewable and alternative energy are expensive.

Commenters stated that while OUC has been and will continue to be aggressive in the development of renewables and alternative sources of energy, the costs are currently very high and add a significant cost burden to our rate payers. The commenters stated that it had invested in demand side management (DSM) and energy efficiency (EE), whic h is not adequately accounted for in the current proposal which recognizes a 2012 baseline.

Commenters stated that EPA is heavily relying on EE/RE expectations to make this appear to be
a cost

- effective proposal. The commenters stated that EPA's complianc e modeling assumes "overall electric demand will decrease significantly, as states ramp up programs that result in lower overall demand", and that energy efficiency alone creates a predicted 11% reduction by 2030. The commenters stated that implementing EE /RE will be to the degree U.S. EPA expects will be challenging.375 Commenters stated that practically all of the NGCC

- fired generation in Florida that the CPP anticipates to be dispatched prospectively is owned by a single investor owned utility (IOU). The

c ommenters stated that to meet the performance standard, JEA and all other entities in Florida will have to purchase NGCC

- fired generation from that single IOU, while idling their own capable generation fleets (for which they are still recovering costs). T he commenters stated that the requirement to invest in EE beyond the level that is cost effective to JEA and Florida ratepayers will cause rates to increase generally for all, but disparately for customers that do not participate in utility

- sponsored EE or customers that invest in RE without a utility incentive. The commenters stated that the most affected by this will be the already economically disadvantaged segments of the customer base.

Commenters stated that EPA's inflated renewables target would requ ire Pennsylvania ratepayers to make additional transfer payments to out

- of

- state generators which provide no offsetting benefits to Pennsylvania's economy. The commenters stated that during Pennsylvania's most recent reporting period (June I, 2012 to May 3 1, 2013) electricity suppliers in the state spent more than $50 million to acquire unbundled credits needed to fulfill their Tier I RPS requirements

. The commenters stated that a significant portion flows to renewable generators in other states such as wi nd farms in Illinois and Indiana, and that payments to these
out

- of

- state generators constitute a sheer transfer of wealth from Pennsylvania ratepayers to Illinois wind farm operators who were already being fully compensated for the electricity they produc ed by purchasers in their own or neighboring states. The commenters stated that it is wholly implausible to suppose that Pennsylvania could reduce this reliance

- and thereby reduce the transfer payments its ratepayers make to out

- of

- state wind farms

- if it is required to meet the much higher renewables target envisioned for it by EPA.

Commenters stated that under Building Block 3, a rapid expansion of wind generation will require a sizeable capital expenditure in a relatively short period of time. The co mmenters stated that this capital investment includes construction of wind farms and transmission infrastructure to accommodate that new wind generation. The commenters stated that the subsequent replacement of these new units in approximately 20 years (th e presumed useful life for wind resources) will require a similar investment. The commenters stated that these abrupt and relatively large expenditures will shock Oklahoma's system, causing demand

- related increases in the cost of financing and delays due t o shortages of equipment. The commenters stated that imposition of the Proposed Rule's Building Blocks will create significant compliance cost and reliability issues as determined by the SPP, Oklahoma's RTO.

Commenters stated that to meet carbon emission reduction targets, energy sources should be evaluated upon their proven capability to meet carbon emission performance goals consistently, reliably and cost

- effectively. The commenters noted that while renewable energy sources should be part of the mix of low

- carbon sources, intermittent energy resources must always be backed up, typically by natural gas

- fired electric generating capacity. The commenters concluded that carbon reduction strategies that explicitly privilege one energy resource

- in effect, ch oosing energy sources based on factors other than meeting carbon reduction goals without requiring higher

- carbon backup

- increase consumer costs and impede progress toward meeting intended goals.376 Response 22: Commenters assert that renewable energy is ex pensive and may increase electricity rates. The EPA believes that the final CPP reflects the Best System of Emission Reductions (BSER) and carbon emission performance goals that are consistent, reliable and cost

effective and renewable energy represents a consistent, reliable cost

- effective compliance choice for the power sector. The final guidelines are structured so that states are not required to use each and every one of the measures that the EPA determines constitute the BSER or to apply any one of tho se measures to the same extent that the EPA determines is achievable at reasonable cost on a national basis. Instead, in developing its plan, each state will have the flexibility to select the measure or combination of measures it prefers in order to achie ve the CO 2 emission performance rates for its affected EGUs or meet the equivalent statewide rate

- or mass

- based CO 2 goal. Thus, a state could choose to achieve more reductions from one measure encompassed by the BSER and less from another, or it could cho ose to include measures such as demand

- side EE programs that are not part of the EPA’s BSER determination, as detailed in Section VIII of the preamble for the final rule. Expressing the states’ obligation in terms of a state

- level goal that can be met in a ggregate, including through the adoption of CO 2 emission reduction measures that are not identical to the components of the BSER or are not included in the BSER, rather than exclusively through source

- specific emission performance rates, is entirely permis sible precisely because the approach mirrors the foundation of the BSER approach itself, namely the interconnected nature of the electricity system in which affected EGUs operate.

States will be able to address the economic interests of their utilities and ratepayers by using the flexibilities in the final CPP to: 1) reduce costs to consumers, minimize stranded assets, and spur private investments in renewable energy and energy efficiency technologies and businesses; and 2) if they choose, work with other s tates on multi

- state approaches that reflect the regional structure of electricity operating systems that exists in most parts of the country and is critical to ensuring a reliable supply of affordable energy. The final rule gives states the flexibility to implement a broad range of approaches that recognize that the power sector is made up of a diverse range of companies of various sizes that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independen t power producers, rural cooperatives and municipally

- owned utilities, some of which are likely to have more direct access than others to certain types of GHG emission reduction opportunities, but all of which have a wide range of opportunities to achieve reductions or acquire clean generation

.

Comment 23. Rural and municipal electric cooperatives will need to recover costs of stranded coal

- fired capacity through higher rates.

Commenters stated that this regulation will eliminate the ability for rural ele ctric cooperatives to use coal to generate their electricity, which will be a huge economic burden to the co

- op and will increase electricity costs for millions of customers that depend on rural electric companies.

Commenters stated that cooperatives have heavy coal

- fired generation portfolios, which allow them to serve their communities at a low cost. The commenters stated that one cooperative noted that "eliminating our coal

- fired generation could increase our wholesale power costs by as much as 40 perce nt" with a corresponding "30

-- 35 percent increase in retail electric rates." The commenters stated that the proposed rule's impact on electric cooperatives would also adversely377 impact small businesses and rural, low

- income communities that are served by these non

- profit, member

- owned cooperatives and eliminate many coal plants owned by electric cooperatives

--- plants that provide jobs and economic health in Texas's rural communities.

Commenters stated that electric consumers in rural areas of Florida hav e median household incomes of less than $40,000 and are primarily served by rural electric cooperatives. The commenters stated that Florida customers are still paying for mandated environmental investments and will continue to pay for them for another dec ade. The commenters stated that rural cooperatives and municipal utilities will have to retire recently upgraded coal power generators before the end of their useful life and build new generators all at the expense of their customers. The commenters state d that if they must continue to pay off the prior costs of installing environmental control technologies, which are no longer being used, and pay for new power plants, rates will increase and the higher rate burden will fall on a segment of our population that can least afford any additional expenses.

Commenters stated that EPA should withdraw the Existing Source Proposal because it would disproportionately impact rural electric cooperatives that seek to provide affordable, cost

- based electric power to rur al Americans in the face of ever

- increasing environmental mandates. The commenters stated that if co

- ops are required to run their coal

- fired units less, they may not be able to compensate by increasing generation at other, lower

- emitting sources. The com menters stated that due to the geographically

- determined disparity in distribution costs, rural electric cooperative members generally pay higher electricity rates than non

- rural electric consumers. The commenters stated that if EPA implements the Existing Source Proposal, co

- op members' electricity rates will most certainly increase and this would place additional burdens on a segment of the population already shouldering a disproportionate load.

Commenters stated that in many, if not most, instances the s tandards EPA has set are so stringent that they cannot be met except by closing or drastically curtailing operations from existing coal

fired EGUs. The commenters estimates that 21% of cooperative coal generation capacity would be scrapped under this propo sal.

Commenters cited EPA estimates of an increase in the national average retail price of electricity of between 5.9 and 6.5 percent in 2020 and between 2.7 and 3.1 percent by 2030 under Option 1 (full deployment of all four Building Blocks by 2030). The commenters cited EPA estimated increases, under Option 2 (lower deployment by 2025), of between 23.6 and 4.0 percent in 2020 and between 2.4 and 2.7 percent in 2025. The commenters stated that Tri

- State's status as an electric cooperative requires that it pass any costs on to its Member Systems, which are passed on to their member

- owners, and Tri

- State's members will be forced to shoulder the burden of higher cost energy and the resulting economic harm these additional costs engender.

Commenters stated th at there will be a disparate cost impact or burden on consumer

- owned utilities COUs to comply with the CPP. The commenters stated that cost recovery mechanisms that are afforded to investor

- owned utilities (IOUs) allow the significant costs of complying wi th CPP to be recovered from ratepayers in a manner that will not erode the earnings of stockholders, and in some cases, investment in new generation will increase IOU "rate base", thereby increasing earnings. The commenters stated that COUs will recover co mpliance costs by similar means, but COU "owners" will see less value return because they will only see rate378 increases. The commenters stated that in Florida, COUs have relatively newer solid fuel generation assets that will be more prematurely stranded th an will be for IOUs.

Commenters stated that EPA's cost/benefit calculations take credit for phantom benefits and overstate cost savings from EE to reach the conclusion that electricity bills will be reduced eight percent by the CPP. The commenters cited E nergy Ventures Analysis estimates that in 2020, annual household electricity bills in Kentucky will increase 35% over the 2012 rate, an increase of almost $450. The commenters stated that the costs to comply with the CPP will be significantly higher than a nticipated by EPA. The commenters stated that the sustained cold weather in the eastern half of the United States in early 2014 resulted in peak market prices (in PJM) in excess of $2,000/MWH and sustained prices of $70/MWH, well above the "round the clock " average price of $32/MWH experienced in 2013. The commenters stated that cost spikes and sustained high costs will be borne by the Owner

- Member ratepayers. The commenters cited NERA estimates that for the period 2017

- 2031, assuming that all four "Buildin g Blocks" are used, to achieve an average of 22 percent reduction in CO2 emissions, 45 GW of coal units will be retired, resulting in a 29 percent decline in coal

- fired generation. The commenters cited NERA estimates that natural gas generation will about five percent on average and the price of natural gas would increase by about two percent on average. The commenters cited NERA estimates that if the energy sector only employs building blocks 1 and 2, 169 GW of coal units would be retired, natural gas pric es would increase by 29 percent, on average, and the cost of delivered electricity would increase by 17 percent.

Commenters stated that the Proposed Rule will drive up the cost to produce electricity and this cost increase must be passed along to its memb ers. The commenters cited an Energy Venture Analysis (EVA) estimate that under the Proposed Rule in nominal dollars, in 2020, the electricity production cost in Mississippi will increase 225% over the 2012 cost. The commenters stated that SMEPA rates will be impacted well above the national average considering the number of coal unit retirements expected and how disproportionately low Mississippi's CO2 goal is in the Proposed Rule compared to the vast majority of states. The commenters stated that annual Mi ssissippi residential power and gas bills are expected to increase 63% by 2020, increasing by $1,300. The commenters performed an analysis to estimate the impact of the Clean Power Plan if the proposed CO2 limitations had been in place for the years 2008 a nd 2012, and found that when the 732lb/MWh CO2 limit was applied to 2008 & 2012 along with the $80/ton carbon tax, SMEPA would have incurred an additional annual cost of approximately $208.3 million in 2008 and $161 million in 2012.

Commenters stated that should a State choose to reduce the burden on cooperatives, under EPA's approach, the State would need to increase the burden on other utility providers to meet that State's EPA goal. The commenters stated that the final rule should not provide one unit o r utility relief at the expense of other units or utilities. The commenters stated that States need maximum flexibility to draw upon a wide range of tools to determine how to meet emissions reduction goals.

Commenters stated that EPA either fails to recog nize or minimizes the full negative economic impacts of the proposed rule. The commenters stated that NREA members were created to serve sparse rural areas where costs are shared by a smaller number of consumers, and any increase in rates will have a treme ndous negative impact.379 Commenters estimated the total cost for the East Texas Cooperatives to comply with the Clean Power Plan to be $2.9 billion over a ten year period from 2020 until 2030. The commenters estimated the ETCs will face $385 million in stra nded costs associated with the four coal plants being shut down in EPA's model (ISES 2, Plum Point, Nelson 6 and Pirkey) and the closure of the new Woodville biomass plant, $30 million in total decommissioning costs associated with the retirements of the f our coal plants above, and $585 million in replacement costs. The commenters stated that member

- owners are especially vulnerable to electricity price increases. The commenters stated that with a total cost of $2.9 billion, estimated monthly rate impacts ar e $35

- 40 a month, or $420

- 480 per year

- an increase of approximately 30

-- 35% over current electricity bill. The commenters stated that the ETCs serve some of the poorest counties in the state of Texas.

Commenters stated that a large number of electric coop erative members face financial obstacles that will be greatly exacerbated by the EPA's proposed regulations.

Commenters stated that G&Ts have invested billions of dollars to install state of the art emissions controls to comply with numerous other regulations issued by EPA and that EPA is proposing to restrict or eliminate the ability of these well

- controlled units from operating which will leave these investments as stranded assets and result in dramatic, unprecedented and dangerous increases in el ectricity rates. The commenters stated that the Clean Power Plan would force the retirement of an additional approximately 40

- 48 GWs of coal capacity, which is in addition to the forced retirement of approximately 47

- 75 GWs of coal units as a result of the MATS & CSAPR rules. The commenters stated that the combination of this reduction in rate revenue and the cost of filling the generation gap with market power will have an immediate dramatic financial impact on G&Ts. The commenters stated that this impact would be compounded by the additional cost of out of market of operation of coal and gas operation under Building Block 2; the higher cost of renewable energy; and the cost of the energy efficiency measures that G&T distribution member cooperatives would incur trying to meet savings targets in rural service territories where successful implementation of EE programs is very difficult. The commenters stated that G&Ts have limited capital available to them, are heavily leveraged and units running even less th an 10 percent below their operational norm on a continuing basis will be unable to generate enough revenue to service the outstanding debt on the unit. The commenters stated that the Clean Power Plan would drive up electricity rates and disproportionately impact those living in rural America. The commenters stated that EPA's cost/benefit calculations take credit for phantom benefits and overstated cost savings from energy efficiency to reach the conclusion that electricity bills will be reduced 8% by the Cl ean Power Plan. The commenters stated that in rural service territories, increases in rates result in service disconnection, voluntary under

- service, and use of alternative heating and other energy options like woodstoves. The commenters stated that some C ooperatives serve one member per mile of transmission line or less making EE projects even more challenging, as well as reducing any EE gains by the line losses. The commenters stated that Energy Efficiency should not be an enforceable compliance measure.

Commenters stated that implementing a plan to attain the Alaska CO2 Performance Goals will increase the cost of electricity to some Alaskans. The commenters stated that EPA must evaluate the real economic impacts and the federal government must help negat ively impacted locations recover. The commenters stated that coal is currently the only cost effective fuel source available380 for Golden Valley Electric Association (a rural electric cooperative) to use to generate and provide electricity to Interior Alaska customers. The commenters stated that should GVEA need to replace coal generation with available oil generation, the result would be an approximate $60.7 million per year increase in variable cost for the sparsely populated region, and more than $187 mill ion dollars (excluding capitalized interest) in stranded assets.

Commenters stated that the proposed emissions reductions will be impossible for Arizona's rural Electric Cooperative members to attain. The commenters stated that the impact to the citizens of this state and the economy cannot be overstated.

Commenters stated that the costs will have to be borne by cooperatives' members and consumers. The commenters stated that because of the lack of density on electric cooperatives lines

-- in Minnesota, the average cooperative has 6.4 members per mile of line, versus 38

- per

- mile at Investor

- Owned Utilities (IOUs) or 48 at Municipal Utilities

-- those costs will fall proportionally higher on electric co

- op members than other utility customers.

Commenters sta ted that TECA co

- ops receive wholesale electric energy and energy

- related services from TVA through an all

- requirements power contract, which serves as the primary vehicle for the wholesale rate, terms, and conditions of energy sales to the co

- ops, as well as the regulatory powers granted to TVA, which include the oversight of the retail rate(s) and their service practice standards. The commenters stated that energy generated at a hydroelectric dam in Tennessee may ultimately be consumed in North Carolina, energy generated at a nuclear plant in Alabama may be consumed in Mississippi, emission reduction expenditures may occur at a coal

- fired facility in Kentucky and be realized by customers in Georgia, etc. The commenters stated that any cost increases attrib utable to regulatory requirements are passed through completely to the end

- use customer who is also the owner of the utility, by virtue of the cooperative business model. The commenters stated that Federal law generally regulates the co

ops and limits the ability of a state body to compel action from the co

- ops. The commenters stated that the co

- ops are unique among their peers in that their power supplier and regulator are the same entity.

Commenters stated that it had already surpassed Wisconsin state ma ndates for renewables by almost 25 percent and has more distributed generation in the Badger State than all other utilities, despite serving only 11 percent of the people. The commenters stated that the costs of complying with the new regulations will fall hardest on those who can least afford it. The commenters stated that rural electric cooperatives own 43 percent of the nation's power lines but serve only about 11 percent of the population with seven members per mile of line and per mile of line revenues of $10,565. The commenters stated that investor owned utilities (IOUs) have 35 customers per mile of line and per mile of line revenues of $62,655, and municipal utilities have 47 customers per mile of line and per mile of line revenues of $86,302. The co mmenters stated that rural electric cooperatives have significantly higher costs, far fewer consumers to absorb those costs, and much less revenue to cover the expense of such a system. The commenters stated that due to Dairyland's thinly capitalized busin ess structure, operating reserves tend to be low and significant changes will place substantial burdens on Dairyland, its member cooperatives and ultimately the end

- use consumers.381 Commenters stated that the members of NREA are not

- for

- profit distribution only utilities which, in turn purchase all of their wholesale energy needs from not

- for

- profit generation utilities. The commenters stated that our consumer

- owners bear all costs of generation and compliance with EPA regulations through their rates and it is clear that the EPA did not account for the not

- for

- profit nature of rural electric cooperatives and rural public power districts. The commenters stated that NREA members are very concerned that the plan does not have an economic safety valve or cost con tainment guidelines that would mitigate impacts to small utilities and their customers in the event that the costs to comply are much greater than anticipated or have a significant negative impact on electric generation markets. The commenters stated that EPA acknowledges that the proposal will increase the price of electricity, but either fails to recognize or minimizes the full negative economic impacts it will impart. The commenters stated that NREA members were created to serve sparse rural areas where costs are shared by a smaller number of consumers; any increase in rates

- even one improperly characterized by EPA's as modest

- will have a tremendous negative impact.

Commenters stated that the requirement for a 34 percent reduction in carbon emissions from coal plants statewide by 2030 is overly aggressive and will result in disproportionate increase in costs for its membership. The commenters stated that it is already challenged in providing affordable electricity due to the low line density of its sy stems, and increased costs will dramatically impact low

- income consumers in its service territory. The commenters stated that EPA should consider a maximum rate impact or economic off

- ramp for electric cooperatives.

Commenters stated that the proposal wo uld significantly increase the costs associated with generating and transmitting electricity across this country, costs which would ultimately be borne by the end

- user. The commenters stated that rural families and businesses pay higher monthly electricity bills than those living in non

- rural areas, due to the increased costs associated with providing electricity to rural areas, as well as greater usage by rural residents. The commenters stated that the proposal would drive those costs even higher, potentia lly having a devastating impact on the economic recovery of rural communities.

Commenters stated that the proposed rule will result in higher electricity prices. Commenters stated that EPA's proposal does not provide a workable solution to address coopera tives' unique circumstances, such as being heavily reliant on coal and limited in financial flexibility because of their not for profit status. The commenters further stated that the proposal will trigger high prices for many consumers and local businesses and jeopardize the wellbeing of millions of American families, including low income families that are most at risk.

Commenters also proposed that EPA's proposal directly threatens safe, affordable and reliable electricity in rural America and the related economic opportunities. The commenters stated that the proposed additional level of investments in energy efficiency required by cooperatives to implement the fourth building block goes far beyond what can be afforded by cooperatives and their consumer ow ners. The commenters also stated that many of the consumer owners of cooperatives are composed of persistent poverty counties.

Commenters stated that although the local energy cooperative tries to keep energy costs as inexpensive as possible, EPA's propos al will increase energy costs, which are a significant382 portion of operating expenses for the commenters’ small business and will have to be passed on
to customers.

Commenters discussed the impacts of the proposal on power plants owned by electric cooperat ives and the resulting financial burdens on the cooperatives and consumers. The commenters stated that these power plants have a useful life that extends beyond 2030 and coops have invested billions of dollars on environmental controls to meet previous reg ulations. The commenters further stated that the proposal will result in stranded assets and premature shutdowns, which is unreasonable, unjustifiable and arbitrary.

Commenters stated that if the proposed rule is finalized, capital investments would need to be spread and recovered over significantly fewer megawatt

- hours, resulting in an increase in the cost of the electricity for member systems and their customers. Commenters stated that even with subsidies and incentives, you cannot force homeowners to ta ke advantage of energy efficiency offers, and raising power prices so high that people would be forced into it is not equitable for low income rural communities, or for the commercial and industrial consumers served by our members. The commenters then urge d EPA to look for other incentives that work for low income retail consumers and not unfairly punish others, and noted that in a not for profit cooperative the cost of every incentive is spread across all the member consumers.

The commenters stated that be cause rural electric cooperatives are heavily coal

- dependent, the Proposed Rule will have an especially severe impact on rural poverty.

Commenters has indicated that the Clean Power Plan can potentially raise our electrical rates by as much as 30%. Comment ers stated a 30% increase in electrical power cost would have a significant impact on the rates we charge our customers, both residential and industrial.

Commenters stated that South Carolina electric cooperative members are heavily impacted by poverty th at nearly 20 percent of the families it serves make less than $25,000 annually, and in some months many spend as much as 80 percent of their income on energy costs. The commenters stated that the cost increases resulting from South Carolina's attempts to c omply with the Clean Power Plan stand to significantly impact the financial well

- being of the communities it serves and that such increases would not only disproportionately affect South Carolina cooperative members, but since electric cooperatives are own ed by the people they serve, those same people must directly bear the costs of any resulting increases in the cost of electricity.

Commenters stated that South Carolina has 12 persistent poverty counties (26 percent of the state's total), defined as count ies with a poverty rate of 20 percent or higher in each census from 1970

- 2010, and that electric cooperatives serve in all 12 persistent poverty counties in the state, where, in some cases, the median household incomes are 43 percent less than the national average. The commenters stated that 17 percent of electric cooperative members, more than 200,000 people, live below the established Federal Poverty Level ($23,850 for a family of four). The commenters stated that this is 2 percent higher than the nationa l average. The commenters stated that 23 percent of South Carolina's electric co

- op members, more than 254,000 people, live beneath 125 percent of the established Federal Poverty Level ($29,813 for a family of four) which is three percent higher than the n ational average. The commenters stated that South383 Carolina residents above age 65 are especially vulnerable to rising costs for nondiscretionary goods and services, and that more than 40,000 households (36 percent) headed by a co

- op member over the age of 65 have an annual household income less than dollar 25,000. The commenters stated that 24 percent of electric cooperative homes in South Carolina are manufactured housing, and that mobile homes represent 17 percent of the state's housing stock, which is al most 3 times the national average. The commenters stated that more than two

- thirds of South Carolina's co

- op members (68 percent) use electricity as a primary heating source, and that in the state's persistent poverty counties, this number rises to 73 perc ent. The commenters stated many of its members cannot afford the additional economic challenges that may result if all provisions of rule III (d) are enacted.

Commenters stated that ratepayers in Alaska will bear a substantially greater burden under this rule than ratepayers in the interconnected states. The commenters stated that Alaska does not have economies of scale itself, and does not have the opportunity to participate in a regional compliance approach. The commenters stated that the affected EGUs i n Alaska all belong to either cooperative or municipal utilities, and that the financial impact of this rule will be unavoidably felt by utility members and resident ratepayers, not investors.

Commenters stated that the Supreme Court recently reminded EPA , nothing in the CAA authorizes the Agency to regulate GHGs "in any way that would be 'extreme,' 'counterintuitive,' or contrary to 'common sense.' The commenters stated that shutting down Springerville Unit 3 would strand a significant investment made by Tri

- State less than 10 years ago. The commenters stated that the decommissioning and write

- off costs for Unit 3, in conjunction with any measures needed to replace that power supply, would harm Tri

- State, its 44 member cooperatives, and the retail consumer s of those cooperatives through higher rates to compensate for the loss of this valuable asset in Tri

- State's generation portfolio.

Commenters stated that the proposed emissions reductions will be impossible for Arizona's rural Electric Cooperative member s to attain. The commenters stated that the impact to the citizens of this state and the economy cannot be overstated.

Commenters stated that agriculture is often energy

- intensive and depends on the availability of reliable, affordable energy, and a diver se energy supply keeps energy costs reasonable and reliable. The commenters stated that natural gas is used to power irrigation pumps and in the fertilizer used to produce crops; diesel is used in our farm equipment, propane is used to heat poultry and hog houses and to dry corn and soybeans once they have been harvested, and coal is used predominately by electric cooperatives, powering farms, ranches and communities all across rural America. The commenters stated that policies addressing carbon emissions w ould have vast, wide

- ranging impacts both on America's farmer cooperatives, particularly food processors and on individual farmers, ranchers and growers. The commenters stated that farmer cooperatives and their member

- owners are very concerned that regulat ory programs to reduced greenhouse gas emissions will result in higher business costs, especially those related to energy, fuel, and fertilizer and if increased costs are passed along to the consumer, American agriculture will lose its competitive edge in the global marketplace. The commenters stated that they do not support adopting policies that would impose new costs on U.S. agriculture producers while letting our foreign competitors avoid such costs and believe that farmer cooperatives or their producer

- owners will not continue to receive an affordable and reliable supply of energy.384 Commenters stated that with the cost of replacing existing coal

- fired generation with natural gas and a mix of renewables out of reach for many municipal utilities, the natu ral course is to look for replacement power from sources that are often far removed from the local economy. The commenters stated that will vest the private sector power companies with all the country's generation assets.

Commenters stated that because th e proposal would likely result in the premature closure of existing power plants, the proposal's requirements amount to a regulatory taking requiring compensation because of the premature closures and uneconomic curtailment it will require. The
commenters stated that this is especially true considering that many electric cooperatives, including those in Mississippi, constructed coal fired generating facility in accordance with the Fuel Use Act, in which the federal government required that no new base load electric generating plants be constructed without the capability to use coal.

Commenters stated that as a rural electric cooperative, the dramatic increase in rates from the CPP will exacerbate the difficulty that poor Americans already face with the cost of electricity. The commenters stated they are providing EPA with comments on the special considerations of the impact of the proposed CPP on the ability of rural electric cooperatives to comply with the REA federal mandate that EPA should factor into pro mulgation of a final rule, if any is issued. The commenters stated that they have invested billions of dollars in retrofitting their fossil units with state of the art emissions controls and installing new, very low emission generation in order to comply w ith other CAA regulations and members must still pay for them even though the CPP will restrict the operation of or force the retirement of this generation.

Commenters stated that EPA's estimates project that this rule will cause nationwide electricity
pr ice increases averaging between six and seven percent in 2020, and up to 12 percent in some locations, and also estimates annual compliance costs between $5.4 and $7.4 billion in 2020, rising up to $8.8 billion in 2030. The commenters concluded that these substantial power sector compliance costs do not capture the subsequent adverse spillover impacts of higher electricity on overall economic activity, and the comprehensive financial impact for business, manufacturers and residential customers should be bet ter understood and analyzed before this rule is finalized.

Commenters stated that they were concerned that Nebraska's public power districts may be unduly affected by EPA's proposed Clean Power Plan. Commenters said that Nebraska is the only state who, by statute, meets all of its power needs through a public power system. Commenters said all power in Nebraska is delivered by entities governed by independently elected boards. Commenters said this system continues to be extremely effective in meeting the

ne eds of Nebraska citizens by delivering reliable, low

- cost electricity. Commenters said that as it stands, the Nebraska public power districts may need to reduce capacity and reliance on existing units in order to comply with this proposal.

Commenters stat ed that in the last 10 years, Nebraska's population has grown only by 0.7 percent. Commenters said that since 2000, 69 of our 93 counties have experienced a decline in population, while our urban areas have experienced the added challenge of serving an inc reasing population. Commenters said both create unique population dynamics that the power districts must be ready to serve and sustain. Commenters said the proposed Clean Power Plan, in concert with other already enacted regulatory issues facing Nebraska u tilities such as the Mercury and385 Air Toxics Rule, the Cross State Air Pollution Rule; and the Sulfur Dioxide standard/consent decree, has the potential to disproportionately impact Nebraska's public power system. Commenters said the Nebraska public power s ector is being required to implement many costly compliance measures over such a short period of time.

Commenters stated as indicated in comments filed on September 29, 2014, which are hereby incorporated by reference, this proposal would affect approxim ately 100 small public and cooperative entities if the 4 million MWh of sales definition is used. Commenters' analysis determined that it is likely that the small public and cooperative utility subcategory would result in less than a 1% leakage rate from t he carbon reduction that EPA is seeking. Commenters said changes to the proposal from his organization's September 29, 2014, comments include the following:

Clarification that small public or cooperative utility requests applicability of the subcategory (in paragraph (b) introductory language). Provided some clarification on how to handle units that are partially owned, or owned by not operated, which is a sit uation that applies to many cooperatives. Revised language addressing this issue is found in paragraphs (b)(2), (b)(3)(i)(B), and (b)(3)(i)(E)(III). Slightly loosened the language of paragraph (b)(3)(iii) to allow consideration of book life as suggested in EPA's Notice of Data Availability ("NODA"), while maintaining the requirement that the State Plan identify a date certain for shutdown. Added a new paragraph (b)(3)(iv) allowing a unit to avoid the mandatory shutdown requirement if the small public or coo perative utility system would come into compliance with the Final Goal by December 31, 2039.

Commenters stated at a meeting in September, 2014, and again in November, 2014, the EPA inquired whether adequate flexibility exists under other provisions of the Proposed Rule to eliminate the need for the proposed small public and cooperative utility subcategory. Commenters said respectfully, AEPCO does not believe adequate flexibility exists. Commenters stated first, as detailed in the comments of the Arizona De partment of Environmental Quality ("ADEQ") submitted on November 21, 2014, in Arizona there is no flexibility to alter the application of the Building Blocks and still achieve both the Interim and Final Goals. Commenters stated thus, ADEQ does not have any practical ability to provide the relief needed to small public and cooperative utilities, at least under the current Proposed Rule. Commenters stated second, even if the Interim Goal is relaxed, under the Proposed Rule's approach of defining a final, nume ric target, any relief that is granted to a small public or cooperative utility will result in another entity having to reduce proportionally more. Commenters said it is unclear whether, in such a zero sum situation, that a state agency such as ADEQ would find it politically possible to extend relief to deserving entities with limited financial capabilities. Commenters stated third, it is not clear, given the Section 111's requirement that cost be considered in setting the standards of performance for each individual source, that it is appropriate to apply unreasonably costly controls to small public and cooperative entities or to reapportion costs beyond what a reasonable control costs on other entities. Commenters said these problems are solved by creating a subcategory which meets its own criteria without reapportioning between the subcategory and the other sources no longer represented in the subcategory.

Commenters expressed concern about municipal utilities and rural cooperatives. Commenters stated ther e are numerous examples of municipal utilities and rural electric cooperatives (electric386 coops) with outstanding energy efficiency programs that are achieving high levels of energy savings, and doing so cost effectively. Commenters stated that while they d o not suggest that any adjustments in the proposed standards are warranted, they acknowledge that the range of opportunity for emissions reductions may be more limited for rural electric cooperative utilities. Commenters said this may, in turn, impact comp liance costs, which are of particular concern for rural electric cooperatives that tend to serve lower income residential customers. For this reason, commenters stated it is critical that electric cooperatives are able to realize the opportunity of
energy efficiency as a least

- cost compliance pathway. Commenters stated that the EPA should seek opportunities to provide technical assistance to electric cooperatives to facilitate implementation of energy efficiency programs, or connect electric cooperatives w ith financing resources available from the U.S. Department of Agriculture (USDA)

- through initiatives such as their Rural Utilities Service (RUS) Energy Efficiency and Conservation Loan Program (EECLP), and other agencies that can serve as the foundation for effective, accessible programs

helping rural electric cooperatives to meet their savings goals while promoting more affordable, more comfortable homes for their membership. Commenters added that the Electric Cooperatives of South Carolina have leverag ed on

- bill financing to create one of the most successful cooperative energy efficiency programs in the Southeast, the Help My House Program. Commenters stated the average participating home cut electricity use by 34 percent

- nearly 11,000 kWh per year du ring this program with an average simple payback of just over six

- and

- one

- half years. Comment ers stated after t hese loans are paid off, program administrators predict that annual savings for an average home will increase to more than $1,100 per year, produ cing a net cumulative savings after 15 years of more than $8,500. Commenters recommended that municipal and electric cooperative ene rgy efficiency programs included in state implementation plans include third

- party verification of savings as approved by the state and in line with standards suggested/required by EPA.

Response 23: Commenters assert that municipal and electric cooperatives will be negatively i mpacted by the Clean Power Plan and will need to recover costs of stranded coal

- fired capacity through higher rates. The EPA recognizes that the power sector is made up of a diverse range of companies of various sizes that own and operate fossil fuel

- fired EGUs, including vertically integrated companies in regulated markets, independent power producers, rural cooperatives and municipally

- owned utilities, some of which are likely to have more direct access than others to certain types of GHG emission reducti on opportunities, but all of which have a wide range of opportunities to achieve reductions or acquire clean generation. The final rule gives states the flexibility to implement a broad range of approaches that recognize the diversity in the power sector i n development of implementation plans.

The EPA’s analysis for the CPP, based in part on observed decades

- long behavior of EGUs, shows that all types and sizes of affected EGUs in all locations are able to undertake the actions described as the Best System of Emission Reduction (BSER), including investor

- owned utilities, merchant generators, rural cooperatives, municipally

- owned utilities, and federal utilities. Some may need to focus more on certain measures; for example, an owner of a small generation port folio consisting of a single coal

- fired steam EGU may need to rely on more multi

- unit compliance approaches, possibly including the purchase of emission credits or allowances, because of a lack of sufficient scale to diversify its own portfolio to include NGCC capacity and renewable capacity in addition to coal

- fired capacity. As noted in the preamble of the final rule, as a legal matter, it is not necessary that each affected source be able to implement the BSER, but387 in any event, in this rule, all affecte d EGUs can do so. Because states can reasonably be expected to establish standards of performance incorporating emissions trading, affected EGUs may rely on emissions trading or other multi

- unit compliance approaches authorized under their states’ section 111(d) plans to, in effect, invest in building block measures that are physically implemented at other locations. See the GHG Mitigation Measures Technical Support Document for more information on this topic.

Comment 24 : Clean Power Plan will impact Trib es.

24.a. Commenters state that certain tribes are coal

- based economies that the CPP may impact negatively affecting these tribal economies and tribal jobs.

Commenters stated that the Navajo Nation is a coal

- based economy and believes that any climate ch ange rule promulgated by EPA should consider the unique situation of the Navajo Nation, including its underdeveloped economy, lack of access to electricity, and staggering unemployment rate.

Commenters stated that The Navajo Nation is a uniquely disadvanta ged people and their unique situation justifies some accommodation. The commenters stated that there are three large coal

fired power plants on or near the reservation that are vital contributors to the economy of the Navajo Nation and employ a significant number of Navajo workers. The commenters stated that the plants located on the reservation make lease payments and pay related fees that contribute significant funds to the Navajo Nation government, which allows it to provide services to the Navajo people . The commenters stated that it wishes to preserve the operation of these power plants while also finding means to improve the Navajo Nation's overall economy and access to electricity by Navajo Nation residents. The commenters stated that does not support any proposed measures by EPA that could be potentially devastating to the Navajo Nation economy. The commenters stated that the Navajo Nation also depends on oil and gas revenues which fluctuate greatly, thus severely affecting the Navajo Nation's revenue stream, but that revenues, taxes, and lease payments related to coal are a steady and reliable source of revenue.

Commenters stated that EPA did not account for the local economic effects of co

- firing and gas conversion on the Navajo Nation. The comment ers stated that decreased use of regionally available coal to accommodate increased use of off

- reservation natural gas would cause significant adverse local economic impacts on the Navajo Nation as a result of lost revenue from and decreased employment at the Kayenta Complex and Navajo Mine, which supply coal to NGS, and FCPP, and should be avoided. The commenters stated that the Navajo Nation is particularly sensitive to this situation, as its economy and the Navajo Nation's General Fund, which funds servi ces to the Navajo people, are heavily dependent upon the fate of the two coal

fired power plants located in the Navajo Nation and the sale of coal to those plants.

Commenters stated that the Crow Nation receives revenues equaling 66 percent of its annual operating budget from severance taxes paid for the mining of coal owned by the Crow Nation and ninety percent of the coal mined is sold to, and burned at, electrical generating units (EGU) in Minnesota. The commenters stated that the Proposed Rule strongly encourages the State of388 Minnesota to demand retirement of the older units of the power plant to meet with carbon reduction goals set by the EPA.

Commenters stated that the majority of Deseret's member

- consumer load serves economically challenged rural ar eas and tribal communities that will be placed at heightened risk for material adverse impact by costs of compliance with the Supplemental Proposal. The commenters stated that given the small relative size of Deseret and the relative impact of having only one jurisdictional EGU that it operates, EPA should formulate the Supplemental Proposal as pertains to the Uintah

- Ouray Reservation to minimize the impacts of the Supplemental Proposal. The commenters stated that a portion of electric output from the Bona nza Unit is sold to off

- system wholesale contract customers under terms of long

- standing power sales agreements. The commenters stated that those long

- term contracts pre

- date the Supplemental Proposal by many years and under those arrangements, Deseret has very limited ability to pass through to such long

- term contract purchasers the increased costs of compliance with the Supplemental Proposal. The commenters stated that the tribal members living in and around the Uintah

- Ouray Reservation, together with the rural consumers in surrounding communities will likely bear a disproportionate share of such increased costs.

Commenters stated that coal mining provides production taxes and royalties to the Crow Nation exceeding $20 million in 2010 when the Mine was op erating at full capacity and that the revenue generated represents as much as two

- thirds of the Crow Nation's annual non

- federal budget. The commenters stated that WRI employs a 70% tribal workforce, with an average annual salary of over $66,000, and a tot al employment expense of approximately $18.6 million dollars. The commenters stated that the mine is the largest private employer within the Crow Reservation and is a critical source of jobs, financial support and domestically produced energy.

Commenters stated that many western power plants and associated mines reside on or near tribal lands and provide significant economic benefit to the tribal economy including employment of Native Americans.

Commenters stated that should the EPA's Existing

- Source Pro posal be finalized, Seminole's coal

- fired power plant will be forced to close

- leaving 300 skilled employees and as many as 600 contractors without a job. The commenters stated that Seminole is also the largest taxpayer in Putnam County, and paid more tha n $5 million in property taxes in both 2013 and 2014. The commenters stated that Putnam County cannot afford to lose Seminole's coal

- fired power plant or any of the jobs associated with the facility.

Commenters stated that the proposal will retire or sign ificantly reduce the operation of Seminole's facilities (both SGS and MGS), resulting in severe economic impacts on Seminole. The commenters stated that a forced retirement prior to the end of their useful life will result in substantial stranded debt, as well as additional costs associated with generation to replace these units. The commenters stated that IPM also projects that the proposal would have dramatic impacts on the NGCC and peaking units at MGS. The commenters stated that the IPM Policy Case proj ects that these units will operate in 2025 at a capacity factor of just 16.1 percent, representing a two

- thirds reduction in generation from 2012 to 2025. The commenters stated that EPA has not considered, and must account for, the severe economic impacts Seminole would face if the NGCC and peaking units at MGS are forced to reduce generation.389 Response 24.a. : As described in sections III.A and XI.F of the preamble to the proposed carbon pollution emission guidelines for existing EGUs (79 FR 34845

- 34847; Ju ne 18, 2014) and sections II.D and VI.F of the preamble to the proposed carbon pollution emission guidelines for existing EGUs in Indian Country and U.S. Territories (79 FR 65489; November 4, 2014), the final CPP was developed after extensive and vigorous outreach to tribal governments. After issuing the supplemental proposal, the EPA held additional consultation with tribes as described in the preamble for the final rule Section VII.F.

The EPA conducted an analysis of the cost, benefit and economic impacts of the CPP for tribes in the Regulatory Impact Analysis for the Carbon Pollution Emission Guidelines Supplemental Proposal and for the final emission guidelines in the Regulatory Impact Analysis for the Clean Power Plan Final Rule (RIA) for illustrative i mplementation scenarios

. This rule does not directly impose specific requirements on EGUs located in states, U.S. territories or areas of Indian country

. The rule also does not impose specific requirements on tribal governments that have affected EGUs loca ted in their area of Indian country . For areas of Indian country, the rule establishes CO 2 emission performance goals that could be addressed through either tribal or federal plans. See the RIA and final rule preamble section XII. F. for more information.

24.b. Commenters state that renewable energy will be beneficial to tribes by providing steady revenue, creating jobs, allowing tribes to manage their own electricity projects and improving the standard of living for tribes.

Commenters stated that tribes can use renewable generation to obtain steady revenues for the tribal government (for example, through export of electricity), create jobs in the reservation, manage their own electricity projects as opposed to depending on private entities for service del ivery, and ensure a better standard of living for tribal members who currently lack access to services. The commenters stated that a distributed generation

- based rural electrification program may not be able to provide tribal governments with a large sourc e of income, and a utility

- scale project would not provide energy to members located far off the grid, so a balanced mix of distributive and utility scale generation may be needed to meet both sets of needs. The commenters stated that EPA should also infor m tribes of available funding mechanisms to incentivize these projects, for example, through DOE's Tribal Energy Program. DOE's Wind Anemometer Loan Program. The commenters stated that a land lease to a third party, who in turn develops a solar or wind fa rm, offers the tribe the possibility of accessing tax incentives, which do not apply to Native Americans because they are not taxable entities, however, a tribally

- owned project would generate a larger source of revenues than land leases, but it would also require experience in developing and managing projects. The commenters stated that tribes would benefit by moving away from coal, which is no longer economical and results in major environmental and health harms, as their own communities have attested.

C ommenters stated that the Clean Power Plan can result in ancillary benefits, such as the expansion of renewable energy, energy efficiency, a modernized grid and can create good jobs for people who desperately need them. The commenters stated that some jobs will be lost and some tribal members will be affected as tribes make the transition away from fossil fuels, and the government has a key role in working with tribes to help ensure a fair and just transition to a clean energy economy.390 Commenters stated th at the Moapa Band of Paiute Indians became the first tribe in the nation to develop commercial scale clean energy project

-- solar. The commenters stated that they have a power purchase agreement with LAWP for the first 200 megawatts of solar project calle d First Solar, and tribal members are all working and all have good paying jobs. The commenters stated that they have a call out to our neighbors for hundreds of more workers, who should be able to transition into the other solar projects with good jobs, s afe jobs, and green jobs.

Commenters stated that while some tribal members are employed at these power plants, research indicates that considerably more jobs could be created with renewable resources that could be used in lieu of coal

- fired generation. Th e commenters stated that distributed renewable generation, such as rooftop solar installations, would be far more effective at closing the electrification gap among Navajo residents. The commenters stated that renewable development under the Clean Power Pl an and the supplemental proposal has the potential to increase the standard of living of tribal communities and provide a steady source of revenue for tribal governments. The commenters stated that solar panels and wind turbines produce not only a valuable commodity, but they can also result in a large number of high quality jobs, providing an opportunity to increase the overall employment rate, provide electricity to tribal members that are located far from the electric grid, and increase revenues for the development of infrastructure in the reservations.

Response 24.b. : The EPA agrees with commenters that renewable energy (RE) may be beneficial for tribes. Tribes may find opportunities to use renewable generation to obtain steady revenues for the tribal g overnment (for example, through export of electricity), to create jobs on the reservation, to manage their own electricity projects as opposed to depending on private entities for service delivery, and to ensure a better standard of living for tribal membe rs who currently lack access to electricity services. See section IX.B of the final rule preamble for further discussion of how EPA is promoting community involvement in the state plan development process. Additionally, in sections I X.C and D the agency pr ovides information on resources that it will be making available to help low

- income communities access EE/RE and financial assistance programs. Additionally, in section IX.C the EPA encourages states to consider similar approaches to approaches that other states are already using to help provide low

income communities with access to financial and technical assistance programs for EE and RE.

24.c

. Commenters state that emissions from the Navajo Generating Station and five other coal

- fired power plants are ha rming tribal health.

Commenters stated that EPA should be able to protect public health and safety and that emissions from Navajo Generating Station and five other coal

- fired power plants in the region is harming tribal health. Commenters stated that a h ost of respiratory illness plagued those living on Black Mesa with bronchitis and black lung disease and asthma.

Commenters stated that for this rule to be effective EPA should look at all stages and impacts of coal and fossil fuel and gas, natural nuclear power plant. Commenters stated that they are downwind from Navajo Generating Station and Four Corners Power Pl ant and the only feedback from the Department of Interior as the trust responsible party is that they hold trust responsibility for 10 tribes in Southern Arizona, which is supplied with Central Arizona Project water. Commenters stated that Center Arizona P roject water is from the Navajo Sandstone Aquifer391 only, supplying for mining activities on Black Mesa, which has depleted aquifers and springs. Commenters stated that of the energy that is produced at Navajo Generating Station, EPA identified, only 320 m egawatts is needed to push the water from Lake Havasu to Tucson. Commenters stated that however there's 2,250 megawatts being produced, so the rest of it is all for profit and that this is just a profit issue, not a health issue. Commenters stated EPA ha s violated the way of worship, freedom of religion.

Response 24.c. : Tribal health and safety associated with air quality in and around the Navajo Generating Station and Four Corners Power Plants are important to the EPA and are a part of its mission as mandated by the Clean Air Act. Programs such as the National Ambient Air Quality Standards and National Emission Standards for Hazardous Air Pollutants are established to protect health and welfare from criteria air pollutants and hazardous air pollutants, respectively. Recent actions taken or planned for regional haze at the Four Corners Generating Station and for the Nava j o Generating Station will be beneficial for air quality in the region as well as resulting in regional haze improvements. In Navajo ter ritory, units are expected to shut down in order to comply with requirements for Best Available Retrofit Technology (BART) prior to the target date for the goals proposed in this action. 14 These units represented approximately 30 percent of total EGU CO 2 em issions in Navajo territory in 2012.

Comment 25: Commenters stated that the rule is inefficient.

Commenters stated that the proposed rule is not economy

- wide in its emission control regime, since the proposed existing source emission standard applies onl y to electric generating units. The commenters stated that the proposal lacks the market

- efficiency mechanisms that a comprehensive legislative approach could include and that the burden of emissions reduction is placed on the electric generating sector ra ther than on the economy as a whole.

Commenters stated that the agency can strengthen the rule and make it more consumer

- friendly by using the least

- cost means to displace the most carbon intensive generation. The commenters stated that a rule organized i n this manner would prioritize energy efficiency and renewables, include far less natural gas, if any, and likely omit nuclear generation entirely. The commenters stated that renewable energy is already cost competitive with existing generation in some reg ions and is rapidly becoming cost competitive elsewhere. The commenters stated that in a straight comparison of new investments, onshore wind and utility

- scale solar generation projects are already cheaper than building coal, natural gas, or nuclear plants

. The commenters stated that if the agency does not revise the proposed best system of emission reduction according to this principle of incremental lowest

- cost carbon emission reduction, it should nonetheless outline potential compliance strategies that f ollow the principle to give states strong guidance on how they can comply with the rule at the least cost.

Commenters stated that CO2 levels will likely continue to decline, at least from the US due to 1) substitution of less

- carbon

- intensive natural gas for coal and petroleum, and 2)

14 http://www.epa.gov/region9/air/navajo/392 growth in non

- carbon generation, especially renewables such as wind and solar. The commenters stated that these two factors, when applied to the lower electricity demand growth, produced actual CO2 emissions of 2,053 MMmt in 2013 in the power sector. The commenters stated that over a billion metric tons of CO2 emissions have been averted in the 8 years since 2005 by the two factors that contributed to the decline in the carbon intensity of the electric power sector. The commen ters stated that these measured developments will not benefit from layering on a new, sprawling federal mandate. The commenters stated that market forces will further complement and support new technological and research developments underway within the
pr ivate sector, within the states, and within countless federal agencies. The commenters stated concern that the CPP will become a new command and control regulatory scheme impeding new developments in an energy sector already driven to reduce carbon emissio ns.
Commenters conducted a review of climate change literature and discussed market responses and barriers, social costs, positive externalities and policy implementation issues. The commenters summarized the literature by concluding that significant mark et barriers exist, social and transitional costs are substantial, dynamic conditions exist that can allow goals to be achieved at a lower cost than analyses estimate. The commenters stated that achieving climate benefits will require policies that address market barriers in both supply and demand.

Commenters stated that the Clean Power Plan goals, building blocks, and modeling demonstrate that some regions of the country will be more dramatically impacted by the GHG emissions requirements, and the SSEB regi on is one such example. The commenters stated EPA needs to consider the economic health of the region and its impact on the vibrancy and security of the national economy.

Commenters stated that with the current Wyoming 2030 emissions reduction goal, the f our EPA Building Blocks are unattainable and do not consider the low population in Wyoming, the nature of its power plants, the lack of gas fired power plants within Wyoming and the structure of its renewable energy industry. The commenters stated that if Wyoming could successfully negotiate with the EPA to reduce its 2030 emissions goal to a more attainable level, Wyoming may be able to achieve plan compliance though the implementation of the EPA Building Blocks, however, without a substantial reduction in the EPA emissions goal, Wyoming may be forced to close many of its coal fired power plants which would be devastating to national, state and local economies.

Commenters stated that independent power producers are facing significant compliance requirement s under the Proposed Rule with no clear mechanism to comply with such requirements and no way to fully recoup the costs of compliance. The commenters stated that implementing the Clean Power Plan as proposed will result in added carbon costs that are poten tially so severe that many privately

- owned coal

- fired plants may be forced to early retirement, eliminating the ability of the facilities to competitively serve the electricity needs of residential and industrial customers.

Commenters stated that the acti ons to meet the proposed reductions all have frontloaded substantial costs, resulting in consumers in Minnesota having to bear much higher financial burden than consumers in most neighboring states. The commenters further suggested that it393 should be possib le to modify the design of the program so as to place states on more equal footing.

Commenters stated that ratepayers in Alaska will bear a substantially greater burden under this rule than ratepayers in the interconnected states. The commenters stated tha t Alaska does not have economies of scale itself, and does not have the opportunity to participate in a regional compliance approach. The commenters stated that the affected EGUs in Alaska all belong to either cooperative or municipal utilities, and that the financial impact of this rule will be unavoidably felt by utility members and resident ratepayers, not investors.

Commenters stated that the proposed interim goal for Arizona would require Arizona to achieve greater emission reductions by 2020 than any other state affected by the Proposed Rule, and that meeting this interim goal would require a dramatic and abrupt shift in generation from coal

- fired plants to natural gas combined cycle ("NGCC") facilities. The commenters stated that EPA's Integrated Pla nning Model assumes that all of Arizona's coal

- fired power plants would cease operating by 2020. The commenters stated that these plants are important sources of high

- wage employment, and most are located in rural areas where there are few or no alternativ e employment options. The commenters stated that this raised questions about EPA's authority to dictate to the Arizona Corporation Commission the non

- economic dispatch of generation and the effect of such requirements on rates and reliability.

Commenters stated that the proposed rule fails to allow TVA to receive credit for a variety of renewable energy programs, energy conservation, energy efficiency and demand response programs that have contributed to carbon emission reductions in the TVA region, but in stead uses them to, in effect, raise the bar higher for TVA area ratepayers to achieve carbon reduction emissions than for other parts of the country. The commenters stated that EPA proposes to promulgate new or revised regulations that impose a disproport ionate cost of the nation's clean air achievements upon a subset of the nation's population that has already contributed a fair share, if not a greater share, of that cost. The commenters stated that the real ultimate costs of any EPA

- promulgated rule that results in new compliance costs are passed through directly by the LPCs to the end

- use ratepayers of the TVA region. The commenters stated that the proposed rule imposes a disparate economic burden on a section of the nation least able to afford it, and a population which has already paid for major achievements in carbon emission reductions by its prior voluntary efforts upon its own initiative that were above and beyond the environmental requirements of existing law and regulation.

Commenters stated tha t the Bucksport natural gas turbine was not included in EPA's calculation of Maine's baseline emissions, which illustrates the lack of clarity about the status of CHP units in the proposed rule. The commenters stated that the baseline and future goals need to support natural gas fired units, as a clean fuel alternative for the State of Maine. The commenters stated that the proposed standards for Maine are more stringent than what is actually achievable for the natural gas turbines at the Androscoggin and Bu cksport facilities, which achieve 488 and 526 lb. CO2/MW

- h respectively with 100 percent credit for thermal output. The commenters stated that Maine's standards should not be set so low that Maine cannot rely upon natural gas in a future energy mix scenari o. The commenters stated that Maine's proposed standards are so low that other states may consider it a disadvantage to partner with Maine.394 Commenters explained that all of Virginia's neighboring states have electric generating systems that are more carbo n

- intensive than Virginia's, but all have emission rate goals substantially higher than Virginia's final goal of 810 lb/MWh. The commenters stated that in fact, the Proposed Emission Guidelines would require greater reductions in megawatt hours or carbon i ntensity from affected units in Virginia than from similar units in either Kentucky or West Virginia, even though those states generated approximately twice the amount of electricity on a megawatt hour basis from fossil fuel than did Virginia in 2012. More over, the commenters said that in 2012 both Kentucky and West Virginia had electric system carbon intensities in excess of 2000 lb/MWh, compared with Virginia's rate of only 911 lb/MWh. The commenters stated that such differences extend beyond Virginia's i mmediate neighbors, and in 2012 Wyoming not only generated more electricity by fossil fuel than did Virginia but it had a far higher electric system carbon intensity of over 2100 lb/MWh. However, the commenters noted that under the goal assigned to Wyoming under the Proposed Emission Guidelines, Wyoming would be required to reduce the megawatt hours or carbon intensity of its generation far less than does Virginia. Commenters further stated that the disparity in state goals leaves Virginia at a competitive disadvantage to its neighbors and numerous other states because they will be able to comply with the Proposed Emission Guidelines more cost

- effectively. Commenters stated as an example that under a multi

- state compliance agreement, money to purchase CO2 al lowances would flow out of Virginia to states like West Virginia, Kentucky, or Wyoming. Commenters concluded that in the absence of a multi

- state agreement, such states could use their competitive advantage over Virginia to keep their state electric rates or taxes relatively lower in order to lure away existing Virginia businesses and render Virginia less competitive in the quest for new businesses. Commenters remarked that such a disparity in state goals is simply not envisioned under section 111(d).

Comm enters had concerns about the impacts of compliance in areas with electric grids that cross multiple states, such as the SPP and MISO regional markets. The commenters stated that the Proposed Rule does not address or acknowledge the difficulties of having various states in an interconnected regional market attempt to achieve different state

- specific emission targets, likely through market

- distorting taxes, mandates, or subsidies that may work at cross purposes and will undoubtedly create unintended conseque nces for neighboring states and the market as a whole. The commenters provided an example of a generating unit in state that has implemented a carbon tax is setting the market clearing price in regional wholesale markets, this will effectively force partic ipants in other states to pay a carbon tax even though they may live in a state that has chosen a different compliance approach, with a separate set of costs. Similarly, the commenters stated that the economic distortions attendant to implementing the diff erent state requirements under the Proposed Rule will create arbitrary winners and losers among the states that are part of a regional market based both on the different requirements under the Proposed Rule and the specific policies each state adopts. The commenters noted that the EPA has neither acknowledged these concerns nor explained how they can be addressed from a practical standpoint

- particularly considering the aggressive implementation dates set forth in the Proposed Rule.

Commenters stated that implementation of the proposed rule would result in a disproportionately high cost to fast

- growing regions to achieve a questionable benefit.395 Commenters stated that the proposed Clean Power Plan is incompatible with our nation's need for strong and compe titive energy marketplace, and the costly new regulations on electric generation facilities will result in massive price spikes coupled with a destabilization of the marketplace. The commenters feared it will cripple Illinois' manufacturing sector that is a vital cog in Illinois' economy, and that Illinois may lose its competitive advantage as an exporter of
energy.
Commenters stated that manufacturing states with higher percentages of coal generation in their portfolio could be placed at risk for huge eco nomic disruptions for ratepayers. The commenters stated that it is not an acceptable result to produce disproportionate adverse economic impacts on one region over another. The commenters stated that while the market is driving some generation toward natur al gas and the cost of renewable energy is decreasing, both of these would require capital investments in transmission lines and pipelines that must be borne by the ratepayers. The commenters stated that if a drastic reduction in GHGs is required in a shor t time frame or carbon sequestration becomes requisite for existing generators, Michigan's economy would be adversely affected in comparison to other states of equal or larger population with different electric generating portfolios.

Commenters stated tha t the level of renewable energy assumed by the EPA's Building Block 3 goal cannot be achieved. The commenters stated that significant levels of increased renewable energy will have a serious effect on electric rates and that low income customers will be
pa rticularly hard hit. The commenters stated that industrial rates could also be disproportionately impacted because of the higher load factors that most industrial customers have.

Commenters stated that the economically disruptive effects of the proposed regulations outweigh any predictable health and welfare benefit; and that EPA should adopt policies that do not conflict with affordable and reliable supplies of electricity.

Commenters suggested that the EPA encourage the states to adopt governance polici es which allow for spreading the cost of such improvements into the rate base at nominal levels. The commenters stated that consumers routinely see upward variations to their non

- essential utilities such as cable TV, internet, cell phones, etc. without any greater social benefit other than entertainment, and the improved profitability of the service providers; conversely, an electric bill that goes up 1

- 5% will be down in the financial noise of most households, yet could greatly benefit the implementation o f CO2 reductions from the one commodity most essential to our modern way of life.

Commenters stated that nuclear reactors are the most expensive electric generators available. The commenters stated that the cost of retaining nuclear generation has not bee n analyzed. The commenters stated that new nuclear generation is also exceedingly expensive requiring both federal and state subsidies for construction, putting a burden on consumers many times the costs of renewables. The commenters stated that since ther e was no analysis associated with non air quality health and environmental issues, there should be no inclusion of nuclear as part of the renewable block and no credits for nuclear generation should be permitted in the carbon rule.

Commenters stated that EPA's treatment of Georgia's "under construction" nuclear, Plant Vogtle Units 3&4, is inequitable and misguided and would almost certainly result in higher electricity396 rates for its members. The commenters stated that Georgia ratepayers should be allowed t o take full credit for zero

- emitting carbon emissions from nuclear generation in complying with any state or utility

- specific performance standards promulgated pursuant to this rule.

Commenters recommended that EPA include a cost cap mechanism within the Final Rule to protect ratepayers. The commenters stated that the true cost of attaining compliance is impossible to accurately estimate at this time and may be unknown until we are a number of years down the road. The commenters stated that North Carolina does not want its ratepayers to be placed in the position of choosing between electricity and food or medication due to compliance costs that were significantly underestimated at the beginning of the process. The commenters stated that implementation of a cost cap would not deter compliance activities or encourage wasteful spending and that the NCUC and Public Staff have ensured that electric power suppliers pursue
cost

- effective means of compliance and a similar framework can be incorporated in the Final R ule. Commenters stated that similar plans have been rolled

- out and tested in other states and countries and have failed miserably. The commenters stated that every country that has aggressively sought to discourage coal usage has experienced large electr icity price increase with no similar corresponding benefit. The commenters stated that between 2009 and 2013, the average energy bill for EU consumers increased by some 17 percent, while energy costs for individual users jumped by 21 percent, and that bet ween 2005 and late 2013, the average price of residential electricity in the EU rose by 55 percent, and industrial electric rates jumped by 26 percent. The commenters stated that the average U.S household historically pays 12 cents per kilowatt

- hour

- abo ut a third of what the same amount of electricity costs in Germany. The commenters stated that the Proposed Rule will impose clear and substantial hardship on those least able to afford it.

Commenters stated that dispatch is the short

- run means by which the BES meets three constraints essential to its reliable operation: Matching generation from power plants with energy consumption by end users in real time across the entire country; avoiding combinations of power plant operation and energy consumption th at exceed the design capability of the transmission system; and avoiding configurations of generation and consumption that lead or could allow unstable operating conditions for the power plants and other key elements of the grid. The commenters stated that dispatch must also support: the synchronized and stable operation of all generating equipment; voltage and reactive power maintained at appropriate levels throughout the entire system; and ensuring the entire system is configured so it can quickly return to these equilibrium conditions after a disturbance, such as a short circuit, loss of generation, or loss of a transmission element. The commenters stated that under security constrained economic dispatch, the variable operating costs of power plants

- inc luding the cost of any emission allowances or permits they must buy

- influence their operation. The commenters stated that most existing cap and trade systems have various kinds of safety valves, cost containment reserves, or other price

buffering policy features, and that imposing a strict absolute limit on emissions, and requiring the dispatch to respect that limit as an absolute constraint, can lead to extremely high allowance and power prices.

Commenters stated that adoption of the proposed rule will result in a resource portfolio that is unreasonably leveraged toward natural gas

- fired generation, and that such a shift would be imprudent from economic, security, and reliability standpoints. The commenters stated that the diversification of Arizona util ities' resource portfolios not only affects reliability but directly397 impacts rate base The commenters stated that the rates that ratepayers ultimately pay include the utilities' costs to provide service.

Commenters stated that the Proposed Rule is setting requirements on a state

- by

- state basis, but an organized market like MISO does not similarly recognize state boundaries. The commenters stated that this mismatch between the Proposed Rule's framework and the operation of the organized market creates the p otential for capacity shortages in certain locations in MISO by disregarding the locational needs of capacity to serve load in setting reduction targets. The commenters stated that these shortages will drive up prices and transmission costs in addition to the increased costs the Proposed Rule already mandates by requiring the increased use of renewable generation and the Proposed Rule is certain to substantially increase the cost of serving the needs of SMMPA's members.

Commenters stated that this rule is g oing to result in increased electricity prices to consumers and manufacturers, and should be crafted in such a way as to ensure the costs are transparent and justifiable. The commenters stated that while improving its competitive position, the U.S has also continued to reduce GHG emissions, partially as a result of increased usage of natural gas for power generation, and that regulations that jeopardize these advantages will not only stunt U.S. economic growth and job creation, but may also make it more dif ficult for the private sector to finance and develop the technologies needed to effectively reduce GHG emissions over the long

term.

Commenters stated that the CPP includes flawed assumptions and requirements resulting in overly aggressive emissions rate reductions that will raise electricity rates for customers, lead to a curtailment of operations for a significant number of units that are able to efficiently generate reliable, baseload power and allow EPA to assume (without Congressional authorization)

r egulatory roles that have traditionally been held by the states.

Commenters stated that the proposed rule goes well beyond what is allowed under the Clean Air Act and dictates the operation of the generating resources, preventing the economic dispatch of the system which would unnecessarily raise the cost to electric consumers. The commenters stated that many of these citizens are low and fixed income and can least afford an increase in their electricity costs.

Commenters stated that fossil fuel energy is vital to our nation's economy and security and cited an EIA estimate that around 80 percent of our electricity will still come from fossil fuels more than 20 years from now.

Commenters stated that the price for a kilowatt hour of a coal fired power plant does not take into account the related adverse health effects, nor the cost of droughts, flood, and fires related to climate change. The commenters said that if we took these factors truly into account, we would be having a very different discussion about the direct comparison within the cost of fossil and renewable energy.

Commenters stated that a system of state

- by

- state rules will inevitably be less efficient than a unified approach and there is no incentive for merchant firms that sell electricity and related398 services using a for

- profit business model to adopt a portfolio approach to meeting CO 2 emission goals.

Response 25: Commenters state that the CPP is inefficient for a variety of reasons including: 1) the guidelines only impact the power industry when a broader market

- based approach could be more economically efficient; 2) the concern that the CPP will become a new command and control regulatory scheme impeding economic incentives in an energy sector already driven to reduce carbon emissions; 3) ce rtain states will be impacted disproportionately relative to others with state

- specific goals; 4) the overly aggressive requirements of CPP will lead plant closures of units that operate efficiently and lead to higher prices and economic impacts, and 5) st ate

- by

state rules are less efficient than a unified approach and merchant firms lack efficiency incentives.

Regarding commenters assertion that 1) a broader market

- based approach to carbon emission reductions would be a more economically efficient and 2 ) the comments that the CPP will become a new command and control regulatory scheme, the EPA is taking action in the CPP to correct a market failure and to internalize the cost to society (i.e., health and welfare impacts from climate change) not reflected in the market price of the goods produced through the polluting process

– in this case electricity. As discussed in the Regulatory Impact Analysis (RIA), these social costs associated with the health and welfare impacts are referred to as negative externa lities. This regulation addresses this market failure by beginning to internalize the negative externality by reducing CO 2 emissions from existing EGUs which increases social welfare. The EPA recognizes that a broad market

- based approach may offer greater economic efficiencies. However, legislative action is required for such a broad

- based market approach. The EPA is acting within the mandates of the Clean Air Act by finalizing the CPP to address this market failure. It is important to note that the CPP a llows states to take regional approaches to compliance and states may achieve greater economic efficiencies through regional market

- based programs. EPA received many comments suggesting that states should be encouraged to join or form regional market

- base d programs. Many commenters touted the economic efficiency benefits of such approaches, and noted that such programs have features that support electric reliability.

The EPA agrees with these comments, and notes that EPA encourages such approaches. While the EPA is not requiring states to join and/or form regional market

- based programs, EPA notes that such programs can be helpful for many reasons, including features that support reliability. Market

- based programs allow greater flexibility for affected EGUs both in the short

- term and long

- term. Under a market

- based program, affected EGUs have the ability to obtain sufficient allowances or credits to cover their emissions in order to comply with their emission limits. Additionally, EPA continues to encourage states to cooperate regionally. Regional cooperation in planning and reliability assessments is an important tool to meeting system needs in the most
cost

- effective, efficient, and reliable way.

With respect to comments contending that 3) certain states wi ll be impacted disproportionately relative to others with state

- specific goals 4) that the CPP has overly aggressive requirements leading to closure of EGUs that operate efficiently, and 5) state

- by state compliance approaches are less efficient than unifi ed approaches and merchant providers lack efficiency incentives, see sections V, VII and VIII of the final guidelines preamble. These preamble sections discuss the399 ability of affected sources (including merchant generators) to achieve performance and mass base standards. These preamble sections also describe state goals and state implementation plans as well as the flexibilities afforded states in developing their plans. The potential savings and efficiencies available with multi

- state compliance approaches are advanced in these sections of the preamble. See the RIA for more information on the projected changes in electricity prices and other economic impacts associated with illustrative scenario s of actions that may be taken to comply with the CPP.

Comme nt 26: Commenters described overall cost estimates generally higher than those of the RIA.

Commenters stated that TVA has added natural gas

- fired generation, increased their purchase of renewable energy, removed or idled inefficient coal

- fired plants from their fleet, made substantial investments in emissions controls in the existing plants and use nuclear power for about 30% of their generation today. The commenters stated that all of these actions preceded the roll

- out of EPA's proposed Carbon rule. The commenters stated that given the billions already invested by these nine million ratepayers, additional costs could create significant economic hardship to the area.

Commenters stated that the Proposed Regulation's claim that overall customer bills will go down is contrary to experience implementing energy efficiency programs in Virginia. The commenters stated that this claim could only be accurate if the costs of reducing CO2 emissions through energy efficiency programs are less than the variable operating costs (primarily dispatch costs) that would be avoided by the compliance action since compliance requires the displacement of existing generation, and that this expectation is not reasonable in Virginia or perhaps anywhere else. The commenters stated that costs (and lost revenues) associated with investments that continue to exist but not operate will be paid by customers or shifted to other entities, most likely electric energy providers and taxpayers.

Commenters cited a US Chamber of Commerce estimate t hat through 2030, new carbon regulations would, on average, lower U.S. Gross Domestic Product by $51 billion annually, with a peak decline of over $100 billion in 2025; result in the loss of more than 220,000 jobs annually, peaking at 422,000 in 2022; and lower U.S. household total disposable income by more than $580 billion.

Commenters stated that Rule 111(d) costs America's economy greatly through the increased regulation and the energy efficiency programs.

Commenters stated that EPA's Regulatory Impact Analysis Is flawed. The commenters stated that EPA has been far too optimistic and aggressive in its assumptions of implementation of energy efficiency measures in each state and of natural gas supply. The commenters stated that the Agency has not adequa tely considered, or has misjudged the differences in wholesale electricity market structures and the cost of producing, storing, and delivering natural gas, the potential for stranded costs arising from the forced retirement of generation units with remain ing400 economical useful life, the associated potential negative impacts on credit ratings and borrowing costs, and price volatility in electricity and natural gas markets.

Commenters estimated costs under the State Unconstrained (BB1

- 4) scenario at about $5 60 billion (in present value) over the period from 2017 through 2031. The commenters estimated that energy system costs would be greater by about $366 billion in present value terms over the period from 2017 through 2031 under the State Unconstrained (BB1

- 4) scenario. The commenters estimated that the net cost of the State Constrained (BB1

- 2) scenario

- which excludes end

- use energy efficiency, renewables and additional nuclear energy from compliance

- is substantially greater than the State Unconstrained (BB1

- 4) scenario with an increase in energy system costs by about $479 billion in present value terms over the period from 2017 through 2031.

Commenters stated that compliance costs are grossly underestimated because EPA fails to include the total, cumula tive costs that it estimates will be incurred as a result of the proposed rule, it also failed to detail state

- level compliance costs, failed to consider the significant costs that the states will incur in ensuring, the continued reliable operation of the electric grid, and does not consider any of the costs the states will incur prior to January 1, 2020 or after 2030. The commenters stated that EPA's estimate does not appear to include the significant additional costs that will be incurred by the asset own ers, the states and their ratepayers who will need to absorb the costs of stranded capital investments associated with the retirements and abandonments resulting from the proposed rule.

Commenters cited NERA estimates of an average nationwide electricity rate hike of 12 percent. The commenters stated that EPA left several important cost inputs out of its modeling efforts, including the cost of new electricity and gas transmission projects that will be required to satisfy the requirements of the CPP. The c ommenters cited independent experts statements that EPA may have overestimated the degree of heat rate efficiency improvements achievable at power plants by as much as a factor of three, that EPA made optimistic projections about the feasibility of increas ed natural gas use, that EPA failed to include the need for excess natural gas capacity to fill

- in for intermittent renewable energy resources, and that EPA made across

- the

board assumptions about the future of energy efficiency based entirely on past achi evements and not at all on the feasibility of future realizations. The commenters stated that higher energy prices will produce a ripple effect throughout the U.S. economy that will shutter businesses, deter hiring, cause layoffs, increase the price of ess ential goods and services, and increase the cost

- of

living for all Americans, particularly people living on fixed incomes. The commenters cited studies showing that unemployment, and economic malaise more generally, take an appreciable toll on the health and well

- being of Americans by increasing the likelihood of hospital visits and illnesses, raising healthcare costs, and putting stress on families.

Commenters stated that EPA has failed to consider the costs of additional transmission facilities, additio nal natural gas pipeline capacity, additional transmission support capacity, additional financing costs of intermittently used generating capacity, and additional maintenance, repair and replacement due to increased ramping up and down of dispatchable gene ration. The commenters stated that the proposal is deficient and arbitrary in its omission of: 1) any analysis of the direct cost impacts to owners of existing coal

- fired EGUs that would be expected or forced to shut401 down or reduce utilization; and 2) any analysis of the full costs of ensuring a reliable bulk power supply system in a rapid transition to lower carbon and intermittent electricity generation.

Commenters stated that EPA has not included any assessment of the need for firm gas delivery to
suppor t higher utilization of NGCC units. The commenters stated that in peak months, natural gas may not be available without a firm delivery contract, which results in a higher delivered gas price, as the gas must be paid for whether used or not.

Commenters cit ed a NERA study estimating that the unconstrained scenario would result in $366 billion of compliance costs and 45,000 more MW of coal shutdowns, and that this scenario relies heavily on reductions in electricity use via energy efficiency which come at an enormous cost of $560 billion to consumers that is only partially offset with electricity savings. The commenters cited impact estimates for the constrained scenario of $479 billion in compliance costs and 169,000 MW of coal plant shutdowns, accompanied b y non

- electricity natural gas costs increase dramatically to $144 billion.

Commenters stated that the rulemaking notice severely underestimates direct compliance costs. The commenters stated that the agency has made no effort to assess the Proposed Rule's full effect on economic productivity and employment. The commenters stated that more comprehensive analyses predict compliance costs of $480 billion by 2030, an average annual negative impact on GDP of $50 billion, and an average annual net decrease in em ployment of over 200,000 jobs.

Commenters cited a NERA study which found that over the period from 2012 to 2020, about 183,000 jobs per year are predicted to be lost on net due to the effects of four EPA regulations. The commenters stated that the cumulat ive effects or these four rules over the period from 2012 to 2020, would cause about 1.65 million job

- years of employment would be lost. The commenters cited the NERA study estimate that U.S. disposable personal income would be reduced by $34 billion each year on average over this period (in 2010 dollars), and the average annual loss in disposable personal income per household would be $270, with a cumulative loss of $1,750 (in 2010 dollars). The commenters cited a Penn State study estimate that the averag e impacts of displacing 33 percent of coal

- based generation in 2015 at: $166 billion (2005 $) reduction in gross economic output; $64 billion reduction of annual household incomes; and 1.2 million job losses. The commenters cited another study that found t hat the four rules would cause lower GDP

- on average $51 billion every year through at least 2030, with a peak decline of nearly $104 billion in 2025, accompanied by losses in employment. The commenters stated that from 2014 to 2030, the U.S. economy woul d have 224,000 fewer jobs, with a peak decline in employment of 442,000 jobs in 2022, and that slower economic growth, job losses, and higher energy costs mean that annual real disposable household income would decline an average of more than $200, with a peak loss of $367 in 2025.

Commenters cited predictions that, should EPA move forward with its plan as originally announced, consumers across the country will cumulatively pay $17 billion more per year for electricity, GDP will decline tens of billions of dollars over the next few decades, and hundreds of thousands of workers could lose their jobs. The commenters stated that EPA should include safeguards to protect Missourians from burdensome rate increases.402 Commenters stated that "economic dispatch" means meeting electric demand by deploying the most affordable power sources in reliable fashion, and that dispatch is so intimately associated with the provision of retail electricity that federal energy regulators have never even thought to challenge the Stat e's authority over this process. The commenters stated that EPA based Montana's Clean Power Plan targets on an assumption that all natural gas combined cycle power plants in the country would operate at a 70 percent capacity factor, despite the fact that t he national average in 2012 was 46 percent. The commenters stated that currently, natural gas accounts for 5 percent of the electricity generated within the MISO footprint, while coal accounts for 69 percent, and by 2030, as a result of the Clean Power Pla n, MISO projects that gas would increase its share to 24 percent, while coal would decrease its share to 33 percent. The commenters stated that the Clean Power Plan negates Montana's long

- held, if implicit, prerogative to choose to rely on economic dispatc h, and, in its stead, imposes a system of environmental dispatch.

Commenters estimated that CPP compliance will cost Louisiana ratepayers somewhere between $3.9 billion and $5.7 billion, in NPV terms. The commenters stated that stranded utility costs, a

c ost estimate excluded in the EPA's analysis, are estimated at $1.8 billion (NPV). The commenters stated that lost utility base revenues associated with increased renewable energy and energy efficiency programs, represent are estimated to range from $360 mi llion to $439 million (NPV). The commenters stated that the actual estimated cost to Louisiana ratepayers is $200 to $289 per ton, which is far higher than the EPA estimated (national average) compliance costs of $60 per ton.

Commenters stated that the real costs of this plan are not reflected in the economic studies provided by EPA, and there appears to be no full connection or link of the described economic studies to the promulgation of rules within the EPA.

Commenters cite d a NERA projection, in the primary scenario, that the total compliance costs of the CPP will be $366 billion between 2017 and 2031, with an annual average cost of $41 billion between 2020 and 2030.

Commenters cited NERA projections that in the case in wh ich states could use all four Building Blocks, the proposed rule has a present value cost of $366 billion over the period of 2017

- 2031, and the annual average cost over the period of 2020

- 2030 is $41 billion. The commenters stated that these costs are driven primarily by $560 billion in cumulative EE costs, half of which will be directly borne by individual residential, commercial and industrial electricity consumers. Commenters stated, in the second scenario, in which states cannot consider additional RE or EE, the costs are even higher. Commenters stated NERA estimates the present value costs could be Dollar 479 billion from 2017

- 2031, or Dollar 73 billion per year over the 2020

- 2030 period. The costs in the second scenario are driven by increases in electricity prices and natural gas prices. The commenters cited NERA projections that in the State Unconstrained scenario, the CPP will cause electricity prices to be 12 percent higher each year compared to the reference case. The commenters stated that 4 3 states will face average double digit percentage electricity price increases between 2020 and 2030, and 14 states will experience peak year increases in electricity prices exceeding 20 percent over the same period. The CPP will also lead to significant i ncreases in coal retirements. The commenters cited NERA projections of 45,000403 MW of incremental coal retirements under the State Unconstrained scenario, and 169,000 MW of incremental coal retirements under the State Constrained scenario.

Commenters stated that the proposed rule would result in extreme cost increases for electric consumers and threaten the ability of TIEC's members to compete in the global marketplace. The commenters cited ERCOT's estimates that attempting to comply with the Proposed Rule w ill increase wholesale electricity prices in ERCOT (relative to a baseline that is already increasing) between 34% and 49% by 2020, and 14% to 17% by 2029.The commenters cited ERCOT's estimates that the costs of reducing carbon emissions (excluding costs o f building or upgrading transmission infrastructure, natural gas infrastructure upgrades, stand

- by power necessary to meet reserve margins, ancillary services procurement, energy efficiency investments, and potential reliability

- must

- run contracts) will be between $3.8 to $4.4 billion by 2029.The commenters stated that its own analysis estimated cost totaling up to $12 to $15 billion annually in Texas by 2030.

Commenters stated that State or federal implementation plans could require Santee Cooper to devel op or purchase expensive renewable energy generation or implement additional energy efficiency measures, potentially at great cost. The commenters stated that because Santee Cooper must occasionally purchase electricity on the wholesale market to serve its customers, price increases will have a negative financial impact.

Commenters stated that EPA has inappropriately analyzed costs at the national level, and the regional level for renewable energy, and not for what is affordable and achievable at the sourc e. The commenters stated that national cost analysis ignores local impacts creating the opportunity for significant arbitrary localized outcomes that cannot be sustained as a matter of Administrative law. The commenters cited NERA that EPA's estimates of $ 7B in annual savings to the consumer are significantly overstated, and annual costs to comply with the program are likely to reach $41 billion. The commenters cited a recent MIT study that the costs and the benefits of EE investments substantially overstat e the net impact on energy consumption reduction and the associated impact on electric bills and on climate change.
Commenters cited NERA estimates that the rule would cost between $41 and $73 billion per year. The commenters stated that residential rates are projected to increase by up to 50 percent in Colorado as a result of both the proposal and existing State policies. The commenters cited Energy Ventures Analysis estimates that EPA regulations, including the Clean Power Plan, cumulatively would increas e the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012, and that gas bills would increase in Colorado by 61 percent and industrial electricity rates would increase 52 percent. Commenters stated that capital costs neces sary to realize a 7.7% heat rate improvement in Ohio's coal

- fired fleet would be significantly greater than the $751 million estimate. The commenters stated that these costs estimates should be derived from real

- world HRI projects at coal

- fired power plant s, with consideration given to the feasibility of such projects in both vertically integrated and deregulated, competitive power markets. The commenters stated that a "shadow price" of $11.30 per ton was applied to CO2 to drive NGCC generation and the incr eased use of renewable resources in the IPM. The commenters stated that projected costs of CO2 would lead to increased electricity costs for the

consumer.404 Commenters stated that EPA's estimated costs do not consider the implications of more expensive elec tricity across all industries and sectors of the national economy and underestimates the financial impact of the CPP on electricity customers and the economic impact on states. The commenters stated that food would become more expensive to consumers since about 40 percent of the energy required to grow crops and raise livestock comes in the form of electricity

. The commenters stated that EPA should evaluate the cumulative impacts of all the recent regulations on the electric power sector.

Commenters stated that compliance with Building Block 2 would cost Ohioans approximately $2.5 billion (in nominal dollars) more for electricity in 2025. The commenters cited IHS Energy that IHS Energy that reduced diversity increases average wholesale power prices by about 75% and retail power prices by 25%, could reduce US GDP by nearly $200 billion, lead to roughly one million fewer jobs, and reduce the typical household's annual disposable income by around $2,100. The commenters stated that any relationship, assumed, mod eled, or otherwise, between wholesale electricity prices and consumer electricity bills is false, and that such assumptions cannot be used as justification for the proposed rule. The commenters stated that there appears to be little correlation between dem and and consumer electricity bills which calls into question U.S. EPA's assertion that reducing demand via demand

- side EE measures will reduce the price of electricity in the latter portion of the proposed state plan.

Commenters stated that the assumption s severely underestimate cost and do not reflect the capital investments that would otherwise be required by utilities to meet growing electricity demand. The commenters stated that cost for additionally needed generating capacity will be passed along to e lectric ratepayers, increasing their bills for electricity.

Commenters stated that EPA's regulations will impose billions of dollars in costs on the U.S. economy but fail to meaningfully reduce CO2 emissions on a global scale. The commenters stated that t he projected CO2 emission reduction from the proposed rule is, at most, 555 million metric tons (mmt) in 2030, which represents only 1.3 percent of projected global CO2 emissions in that year. The commenters stated that this reduction in 2030 would offset the equivalent of just 13.5 days of CO2 emissions from China

. Commenters stated that EPA's data show the wrong fuel (bituminous coal rather than sub

bituminous coal) at two of MEAG's coal units that were converted to sub

- bituminous coal in 2004 to reduce emissions. The commenters stated that MEAG's forecast shows a fuel cost increase attributable to the increased demand for natural gas resulting from redispatch in the compliance case, and that EPA's data show large decreases in fuel $/MWH costs for its bit uminous coal units, far in excess of what heat rate improvement could achieve, and far in excess the decrease in MEAG's bituminous coal price forecast. The commenters estimated that its additional cost in calendar year 2025 would range from about $187 mill ion to $231 million, or an increase of about 1.2 to 1.5 cents per overall kWh generated in 2025, representing about a 13% to 16% increase in current retail rates. The commenters cited NERA that the proposal would result in an average annual increase of 12%

- 13% in Georgia over the 2017

- 2031 period. The commenters stated that a multi

- year analysis of the cost of the proposed rule based on the EPA approach which included the retirement of Plant Scherer Units 1 and 2 in 2020 and the addition of energy efficienc y programs at the retail level beginning in 2020 and incrementally405 increasing through 2029 estimated average increased retail rates over the compliance period of 8 to 12% with cumulative cost increases of $300 million to $1.2 billion dollars.

Commenters s tated that EPA understates the Proposal's likely disruption to the national economy, the negative impact on energy system reliability and adverse impacts to U.S. energy security, none of which are easy to quantify. The commenters cited NERA that that imple menting EPA's State Unconstrained Option 1

- the State compliance approach with all four Building Blocks

- would cause 45 gigawatts ("GW") of coal

- fired EGU retirement, a 29% decline in coal

- fired generation, a 5% increase in natural gas

- fired generation a nd a 12% increase in electricity prices from 2017 to 2031. The commenters stated that State energy efficiency programs would cost about $560 billion (present value from 2017 through 2031) and total electricity

- related costs would increase by an average of $34 billion per year from 2017 through 2031.The commenters cited NERA analyses of EPA’s State Constrained Option 1

- utilizing only Building Blocks 1 and 2

-- which estimated 169 GW of coal retirements, a 29% increase in natural gas prices and a 17% increa se in average delivered electricity prices.The commenters stated that the additional costs of providing electricity would be about $335 billion, and total consumer energy costs would be about $479 billion (present value from 2017 through 2031). The
comment ers stated that potential infrastructure costs related to natural gas pipelines, electricity transmission and voltage support or ancillary services, and low capacity utilization of non

- retired coal units which would lead to increased heat rates, wear and t ear costs from increased coal unit cycling and additional retirements were not included in the analysis. The commenters stated that the impact on delivered electricity prices to Georgia consumers would range between 12

- 13%. The commenters stated that med ian compliance costs for a representative scenario were approximately $10 billion over a 15 year period (from 2020

- 2034) and that compliance costs to OPC could reach $20 billion under certain scenarios, particularly if the Proposal mandates RE and EE mea sures.
Commenters cited NERA estimates that assuming a state were able to utilize all four building blocks), prices for delivered electricity would increase by about 12% between 2017 and 2031

. The commenters stated that such a state also would see a net c ompliance cost that is greater than $366 billion in present value terms over that 14 year period. The commenters stated that if a state were not able to utilize all four building blocks, then there would be a 17% increase in average delivered electricity p rices, and that such states would see net costs of about $479 billion, as opposed to $366 billion, in present value terms during that same period. The commenters stated that CPP will raise serious economic and societal costs that will affect consumers, emp loyers, and the economy in general.

Commenters stated that some utilities would likely have to build Natural Gas

- Fired Combined Cycle ("NGCC") and Renewable Energy ("RE") generation just to meet the interim goals proposed by the EPA, and Combustion Turbin e ("CT") generation facilities may need to be built in conjunction with RE generating units to provide backup generation for the RE generating units in order to assure reliable electric service for consumers. The commenters stated that large capital expend itures for generation facilities will grow the rate base of the electric utilities in a very short time frame, which will induce rate shock for electric consumers. The commenters stated that in BSER Building Block Two, the EPA has proposed dispatching NGCC s out of economic order in order to increase their capacity factor which would this result in increased cost because the NGCC is being operated in lieu of the most economical generating unit, and could406 be impossible to do so reliably because of constraints on the electrical transmission and natural gas transportation infrastructure. The commenters stated that additional infrastructure may need to be put in place to address the increased use in order to ensure reliable service to electrical and natural gas c onsumers. The commenters stated that such a significant increase in the cost for electricity could undermine the global competitiveness of the U.S. and as a result seriously damage the U.S. economy. The commenters stated that by neglecting to take cost

- eff ectiveness into account when setting EE targets, the EPA is exposing ratepayers to additional cost that may not be justified by the savings that would be expected to result from the EE investment. The commenters stated that the state is not required to com ply with the CAA's aggressive EE goal, but if it does not, it will instead be required to look elsewhere to replace the EE energy savings projected by the EPA, and more likely than not, the alternative options would also be costly (e.g., construction of ad ditional generation facilities).

Commenters cited NERA projections that 43 states will have double digit electricity price increases, and that 14 of those states will have peak year price increases of more than 20%.The commenters stated that NERA also pro jects that EPA's Clean Power Plan could cost consumers and businesses $41 billion or more per year.

Commenters cited NERA estimates that the proposed rule would cost between $41and $73 billion per year, and cause electricity rates in Texas to increase by up to 64 percent. The commenters cited Energy Ventures Analysis, Inc., estimates that the rule would increase the cost of electricity and natural gas by nearly $300 billion in 2020 compared with 2012, that gas bills would increase in Texas by 75 percent an d industrial electricity rates would increase 112 percent.
Commenters cited NERA estimates that the proposed rule would cost between $41 and $73 billion per year and cause electricity rates to increase 15 to 19 percent in Oklahoma. The commenters cited In dustrial Energy Consumers of America that industrial rates are expected to increase 24 percent. The commenters cited Energy Ventures Analysis, Inc., estimates that the rule would increase the cost of electricity and natural gas by nearly $300 billion in 20 20 compared with 2012, and that gas bills would increase in Oklahoma by 81 percent.

Commenters stated that by drastically increasing the cost of energy, the proposed rule will inhibit economic development and hamper growth at a time when many communities continue to feel the negative effects of a prolonged economic downturn. The commenters cited a recent IHS study for the U.S. Chamber of Commerce predicting that proposed EPA CO2 rules will cause the loss of 224,000 jobs annually, increase electricity costs by $289 billion, and lower household incomes by over $500 billion

. The commenters stated that the Mississippi Energy Institute projects that the minimum incremental capital cost for Mississippi to comply with the proposed rule will be $14.2 billion, which will primarily consist of constructing generating facilities not li kely to be built unless compelled by federal mandate. The commenters stated that the rule will almost certainly cause the premature closure of existing coal plants in Mississippi, which will reduce energy diversity, security, and reliability, and will plac e upward pressure on electricity prices.

Commenters cited Kansas Corporation Commission (KCC) estimates as a base case that the EPA Clean Power Plan as proposed would cost the state of Kansas $8.75 billion. The commenters stated that the possible range of costs varies between $5 billion and $15 billion, and the407 corresponding increase in rates is between 10% and 30% over 13 years. The commenters stated that customers of Kansas City BPU would face a much greater cost of compliance due to the expensive upgrad es needed for KCBPU's existing generation fleet. The commenters stated that KCBPU provides electricity to a service territory defined by a low

- income population.

Commenters stated that the compliance costs to the electric industry have been estimated to b e as much as $73 billion per year, and the costs to consumers through higher power costs have been estimated to be up to $48 billion annually through 2030. The commenters stated that 43 states, including Texas, will see cost increases in the double digits. The commenters stated that consumers will also bear an estimated expense of some $560 billion in the costs of new energy efficiency measures that will be required to meet EPA's goals for energy conservation.

Commenters stated that EPA's estimates project that this rule will cause nationwide electricity price increases averaging between six and seven percent in 2020, and up to 12 percent in some locations, and also estimates annual compliance costs between $5.4 and $7.4 billion in 2020, rising up to $8.8 b illion in 2030. The commenters concluded that these substantial power sector compliance costs do not capture the subsequent adverse spillover impacts of higher electricity on overall economic activity, and the comprehensive financial impact for business, m anufacturers and residential customers should be better understood and analyzed before this rule is finalized.

Commenters stated that EPA is proposing a system in which the future generation, and therefore future revenues, from electric utility generating units will be greatly curtailed. The commenters stated that utilities cannot be expected to make massive capital investments in equipment to improve generating efficiency and then not be given the full opportunity to recover those investments. The comment ers stated that the CAA is not an appropriate vehicle to upend the current market

- based electrical delivery system in the U.S.

Commenters cited NERA that the proposed rule would increase costs for the electricity sector by at least $41 billion per year an d would cost utilities and electric cooperatives anywhere from $366 billion to $479 billion over a 15

- year time period. The commenters stated that this could translate into double digit electricity price increases for 43 states, and 14 states could see pea k rates increase by 20 percent or more

. The commenters stated that the proposal, according to the study conducted by NERA, would take an additional 45 gigawatts of coal

- fired units off

- line

- eliminating more power capacity than is currently needed to supp ly the electricity needs of New England

- with a significant proportion of the units being taken offline prior to their scheduled shut

- downs.

Commenters stated that EPA rules that result in the premature retirement of existing coal plants can lead to high er utility rates via direct replacement power costs and through higher borrowing costs if the retirements have negative impacts on utility credit ratings. The commenters stated that credit ratings can be affected because the need for replacement power will likely lead to higher levels of debt, and/or other fixed obligations, rate increases that public power utilities must implement to recover higher replacement costs can compound the effects of other factors (e.g., macroeconomics, energy efficiency, net met ering and other distributed generation initiatives) that lead to reduced sales and higher rates, and a reduction in fuel diversity (by eliminating coal as a portfolio option) exposes utilities to greater fuel price risks.The commenters cited a Fitch Outloo k report that homogenizing the power generation fleet will leave utilities less408 able to manage fuel price risks, and in so far as rating agencies believe an affected utility will be unwilling or unable to pass on the costs of potential price spikes to cust omers, that utility's credit rating will be downgraded. The commenters stated that new environmental regulation that leads to premature retirement of existing coal

- fired resources, or significant increases in the costs to operate these facilities, will tra nslate into higher costs to utility customers through direct expenditures for replacement resources and potentially through higher borrowing costs.

Commenters cited NERA estimates that the proposed rule would conservatively cost the economy at least $41 b illion per year in compliance and over $366 billion in cumulative costs from 2017

- 2030. The commenters stated that the agency double counted the same public health

co

- benefits under previous air quality rules.

Commenters stated that the proposed rule ove restimates benefits, and underestimates costs.

Commenters stated that the rule is estimated to cost between $366 billion and $479 billion to implement nationwide and could push electricity prices up by as much as 17%, all while lowering global temperature s by only 0.018 degrees C over the next 86 years

. The commenters stated that in many states, new laws will have to be enacted before a plan, as envisioned by EPA, can be submitted.

Commenters stated that EPA understates the Proposal's likely disruption to the national economy, the negative impact on energy system reliability and adverse impacts to U.S. energy security, none of which are easy to quantify.The commenters cited NERA that implementing EPA's State Unconstrained Option 1

- the State compliance ap proach with all four Building Blocks

- would cause 45 gigawatts ("GW") of coal

- fired EGU retirement, a 29% decline in coal

fired generation, a 5% increase in natural gas

- fired generation and a 12% increase in electricity prices from 2017 to 2031. The comme nters stated that State energy efficiency programs would cost about $560 billion (present value from 2017 through 2031) and total electricity

- related costs would increase by an average of $34 billion per year from 2017 through 2031. The commenters stated t hat that NERA found much more significant negative impacts, including 169 GW of coal retirements, a 29% increase in natural gas prices and a 17% increase in average delivered electricity prices. The commenters stated that the additional costs of providing electricity would be about $335 billion, and total consumer energy costs would be about $479 billion (present value from 2017 through 2031). The commenters stated that potential infrastructure costs related to natural gas pipelines, electricity transmissio n and voltage support, ancillary services, low capacity utilization of non

- retired coal units (that would lead to increased heat rates), wear and tear costs from increased coal unit cycling and potentially additional retirements were also not included in t he analysis. The commenters stated that while the median compliance costs for a representative scenario were approximately $10 billion over a 15 year period (from 2020

- 2034), compliance costs to Oglethorpe Power could reach $20 billion under certain scen arios, particularly if the proposal mandates RE and EE measures. The commenters stated that EPA does not claim that the rule will have any impact on climate change. The commenters stated that assuming full compliance with the rule as proposed, the reductio n would be about 1.3% of total global CO2 emissions in the year 2030, producing a negligible and probably undetectable impact on atmospheric CO2 concentrations.409 Commenters stated that EPA's cost

- benefit analysis also fails the arbitrary and capricious standard and has failed to consider important aspects of the problem by over

- estimating reliability of the grid under the Proposed Rule, by not evaluating the potential costs of takings claims by owners of EGUs in unregulated markets, by not considering th e continuing costs to consumers of decommissioned or underutilized coal units upon which regulated public utilities are guaranteed a constitutionally mandated adequate rate of return on prudent investment, by not considering write

- downs for asset impairmen t required by utility accounting standards, and overall in failing to consider cost as specifically related to the coal

- fired EGU coal sector

. The commenters stated that EPA's benefits findings are arbitrary and capricious for failure to offset the costs d erived by application of the SCC by the value of remaining useful life of plants lost by the rulemaking, by failing to address aspects of the IPCC Fifth Assessment that deal with extreme weather events in a way that undercuts EPA's findings, and by not dem onstrating in the docket that EPA's heat rate conclusions have a valid basis in demonstrated technical or industry experience.

Commenters stated that the proposed rule currently seems to omit, among other things, (1) electric power and natural gas transmi ssion upgrades; (2) market price impacts on the need for large amounts of short

- time, high

- ramp thermal power production capacity driven by increasing production from variable frequency energy (wind and solar); and (3) localized transition costs (including possible emission control device implementation) necessary to keep existing coal

fired EGUs slated for retirement operational to maintain load voltages while replacement units and/or transmission upgrades can be developed.

Commenters cited NERA estimates that the proposed rule would result in an average electricity price increase of 19 percent in Montana from 2020

- 2029, industry compliance costs from $366 to $479 billion over the period 2017 to 2031, annual compliance costs from $41 to $73 billion, and a possible 29 percent increase in natural gas prices. The commenters stated that consumers will spend an estimated $560 billion to reduce electricity consumption. The commenters stated that coal plant retirements will increase by 45,000 MW

- costing the nation more than one

- third of its coal

- fired electricity generation fleet by 2020.The commenters stated that benefits are calculated using a modeled Social Cost of Carbon (SCC) value that is highly prone to a large number of subjective input values, resistant to informed review and oversight due to its extreme complexity, and

- as a result of these factors

- highly controversial. The commenters stated that health co

- benefits comprise 33 to 56 percent of total benefits and should play a relatively small part in justif ying the expected (and arguably underestimated) costs of the proposed rule. The commenters stated that no new legal requirement exists to promote these health benefits and they could be justified and realized using a completely different approach and argua bly at much lower cost based on existing authority for controlling regulated air pollutants in the CAA.

Commenters stated that EPA brushes aside the impacts on consumers and the economy by minimizing long

- term costs and overstating projected benefits. The commenters stated that the conclusion that prices will decline is based on an inaccurate cost assumptions for implementation each of the building blocks, including an assumption that implementation of energy efficiency measures in every state will cause d emand to go down while relying on a corresponding hope that there will be an unlimited supply of cheap natural gas long into the future. The commenters stated that EPA monetizes the benefits of the proposal based on the co

- benefits of reducing410 PM2.5, SO2, NOx and Ozone, each of which has its own National Ambient Air Quality Standard (NAAQS) that must be achieved for purposes of public health.

Commenters cited NERA that the CPP would raise electricity prices by as much as 17 percent between 2017 and 2031, d epending on which building blocks are available for compliance. The commenters stated that the proposal could also force the retirement of as much as 169 gigawatts (GW) of coal

- fired capacity, on top of the 60 GW projected to close because of, principally, EPA's Mercury and Air Toxics Standards (MATS) regulation. The commenters stated that the CPP would impose about $366 billion in costs on the U.S. energy system between 2017 and 2031. The CPP and MATS would decimate the nation's coal fleet, shutting down r oughly two

thirds of its existing capacity. Overall, NERA found, the CPP would impose about dollar 366 billion in costs on the U.S. energy system between 2017 and 2031. The commenters stated that higher energy costs impose disproportionate economic impacts on small business owners, as electricity costs often constitute a small firm's biggest expenses. The commenters cited the United Mine Workers of America, that the CPP would destroy 187,000 direct and indirect jobs. The commenters stated that "the Clean Po wer Plan would avert less than two

- hundredths of a degree Celsius of warming by 2100

- an effect too small to be measured or verified".

Commenters stated that by simultaneously overestimating the potential benefits of the proposal and underestimating the costs, EPA claims (in error) that the proposed rule will produce economic benefits. The commenters stated that EPA's reliance on the "social cost of carbon" is wholly inappropriate because that calculation has not been subject to a rigorous and transparent rulemaking process. The commenters stated that the analysis fails to properly address international benefits and costs. The commenters stated that EPA fails to use full

- economy modeling to evaluate employment impacts. The commenters stated that EPA's reli ance on co

benefits from simultaneous reductions in pollutants other than GHGs is misplaced and must be revised to reflect the health benefits that would actually be attributable to this proposed rule. (Please see section 8.7.2, comment 1, for EPA’s respon se to the comments on the rigor of the SCC; 8.7.2, comment 5 or EPA’s response to comments on the rigor and transparency of the process used to estimate the SCC; and 8.7.2, comment 3 for EPA’s response to comments on the use of global SCC estimates.)

Comme nters stated that the cost analysis EPA used to evaluate the proposed Clean Power Plan was inadequate as highlighted in an ERCOT 2014 report, which stated that accelerated resource mix changes will require major improvement to ERCOT's transmission system, posing significant costs not considered in EPA's Regulatory Impact Analysis. The commenters stated that the proposed rule incorporates generic and unsupported expectations of levels of integrated renewable generation and energy efficiency that are ambitiou s, unachievable, and uneconomic under traditional standards. According to the commenters, the rule will remove the current diversity in our electricity supplies, diversity which saves consumers more than $93 billion in lower electricity costs, according to a study by HIS Energy, and which also reduces the variability of monthly utility bills by half. The commenters stated that several studies (Energy Ventures Analysis and NERA Economic Consulting), show that the EPA plan will cost $366 to $479 billion over a 10

- to 15

- year period, raising electricity costs in more than 40 states, some with increases exceeding 20 percent; a study by the National Mining Association shows that if we experience another cold winter like the winter of 2013

- 2014, we can expect whol esale power prices to jump 27

- 55 percent across different regions, in all states, and businesses and households411 to pay $35 billion more for natural gas. The commenters stated that a combination of another cold winter followed by a warmer than usual summer would cost consumers $100 bill ion in higher electricity and natural gas prices. The commenters stated that the WPSC also uncovered significant errors in the cost of complying that had been calculated by EPA and that WSPC comments state that the CPP irrati onally discriminates against western mine mouth EGUs as mine mouth EGUs located near Gillette, Wyoming, depended on low cost fuel to offset the expense of air cooling; measures which undermine an original cost advantage undermine the economics of the entir e plant. The commenters stated that the EPA analysis did not take into account the decline in public health and welfare that its proposed rule will cause by the increased amount of money consumers will have to pay for electricity and natural gas.

Commenter s stated that EPA Seriously Underestimates the Cost of Complying with the Rule and the Impact of the Rule on Consumer Electricity and Natural Gas Prices. The commenters cited Energy Ventures Analysis (EVA) analysis of the impact of the rule that estimated wholesale electricity costs will increase by $274 billion, non

- power natural gas costs will increase by $80 billion, and additional capital costs for replacement power will be $53 billion. The commenters stated that these costs excluded investments in na tural gas pipeline and electric transmission the rule will require. The commenters stated that forty

- four states will see double

- digit increases in their wholesale power prices, with 24 states facing increases close to or in excess of 20 percent. The com menters cited a NERA projection that the total cost of the proposal would be to be $366 billion to $479 billion over a 15

- year period. The NERA study cited by the commenters found that the proposal will cause double

- digit electricity rate increases in 43 s tates, and a 12% to 17% average increase in electricity prices Nationwide, with fourteen states facing peak year electricity price increases that could exceed 20%.

Commenters stated that EPA grossly under

- estimates the overall cost of the proposed rule, a nd cited a recent study estimating the compliance cost of the CPP at least $366 billion. The commenters stated that if the CPP, with its interim rate

- based targets, were enacted as proposed, Ameren Missouri would need to construct NGCC capacity prematurely , and that the new NGCC capacity would be dispatched solely for the purpose of the CPP and outside of normal plant economic dispatch, resulting in increased cost to customers. The commenters stated that the resource changes resulting from the interim goals of the CPP would have an estimated cost to Ameren Missouri customers of $4 billion due to the new generation and acceleration of other new capacity additions and costs associated with uneconomic dispatch. The commenters stated that the Agency can mitigate the harmful economic impact of its regulatory program by foregoing mandatory interim goals and instead should only set final goals. The commenters stated that the overall implementation cost of the CPP in terms of energy prices and reduced economic growth is enormous and will be borne by customers and the states for decades to come. The commenters stated that if EPA persists with a rule that requires early and significant progress toward the final goal, all deadlines should be deferred and made contingent upon SIP approval.
Commenters cited NERA estimates that the proposed Clean Power Plan would cost between $41 and $73 billion per year, and cause electricity rates to increase between 13 percent and 14 percent in New Mexico. The commenters cited an analysi s conducted by Industrial Energy Consumers of America estimating that the Clean Power Plan would increase wholesale power prices in the State by up to 23 percent.412 Commenters stated that the four Building Blocks EPA has based the rule on suffer from techni cal and economic problems that will result in this regulation costing far more than EPA projects. The commenters cited NERA projections that electricity prices will experience rate increases from a low of 12% to 17% over the period 2017 through 2031, and n atural gas prices will increase from 2% to 29% depending on the scenarios that are executed. The commenters cited Energy Ventures Analysis estimates that electricity and natural gas costs for residential, commercial, and industrial customers will increase by 60% by 2020 because of the GHG ESPS, the MATS rule and other EPA regulations aimed at the electric power sector. The commenters stated that this will cost $284 billion dollars by 2020, with the total cost increasing with each additional year of implemen tation and residential energy costs will increase by $680 per year by 2020. The commenters stated that total energy costs for industry will increase by 64%, a $200 billion increase that will be passed on to their customers or result in factory closures and operations moving overseas.

The commenters stated, as EPA has recognized, compliance flexibility is both necessary and appropriate in the context of section 111(d) rules for power plants. The commenters stated although the electric system is constructed and operated to accommodate fluctuations in power demand and supply, the changes EPA proposes to require in the power sector will lead to significant reliability, transmission, and natural gas supply issues

- particularly if states are not given broad flexi bility to design workable plans for their EGUs that will protect ratepayers from significant rate increases, prevent potentially significant stranded costs for affected EGU owners, and ensure the continued reliability of the electric system. In addition, t he commenters stated broad compliance flexibility will help to ameliorate the otherwise significant potential that compliance costs stemming from the Proposed Rule will lead to economic upheaval in electricity and fuel markets.

Response 26: Commenters des cribed overall cost estimates generally higher than those reported by EPA in the economic analysis completed for the CPP and reported in the Regulatory Impact Analysis (RIA) for a variety of reasons. Some commenters referenced alternative studies of the

co st and economic impacts of the CPP such as those conducted by National Economic Research Associates (NERA). Commenters generally state that the costs associated with the CPP will lead to significant economic impacts such as increased energy costs and job l osses.
Section V of the preamble presents an assessment of the costs of the final guidelines. The RIA completed by EPA estimates the costs of the CPP for illustrative compliance scenarios and shows that the final rule is beneficial to society with the ben efits far outweighing the costs for the illustrative scenarios analyzed. The EPA recognizes that states will make the ultimate decisions in their implementation planning process of actions that will be taken by EGUs to comply with the CPP. States and sourc es impacted are free to choose alternative implementation approaches that make tend to lower costs and or increase the benefits of the CPP to society so long as the state goals are met.

EPA used the Integrated Planning Model (IPM) to estimate the emission reductions, costs, changes in generation and economic impacts associated with the guidelines by EPA. This model has been peer reviewed and used extensively by EPA and other organizations to analyze costs and impacts of regulatory actions for the power sect or. Detailed documentation for IPM v.5.1 5 is available at: http://www.epa.gov/airmarkets/powersectormodeling.html . It provides forecasts of413 least cost capacity expansion, electricity dispatch, and emission control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. EPA has used IPM for over two decades to better understand power sector behavior under future business

as

- usual (i.e. baseline) conditions and evaluate the economic and emission impacts o f prospective environmental policies. The model is designed to reflect electricity markets as accurately as possible. EPA uses the best available information from utilities, industry experts, gas and coal market experts, financial institutions, and governm ent statistics as the basis for the detailed power sector modeling in IPM. The EPA believes that the assumptions used in modeling the final rule and reported in the RIA best reflect actions that may be taken by states in implementation planning of the fina l CPP. However as previously noted, states will make the ultimate decisions as to implementation planning. See the RIA completed for the final CPP, the GHG Mitigation Measures technical support document, and section 8.4 of this response to comment documen t for more discussion of the underlying assumptions used in the IPM modeling for the final rule.

Regarding references to alternative analyses, NERA issued its report after proposal of the CPP. NERA reports costs that far exceed the Clean Power Plan’s proje cted costs due to widely differing assumptions about the actions that will be taken by EGUs to comply with the CPP. For example, NERA erroneously assumes a maximum heat rate improvement of 1.5 percent compared to EPA’s 6 percent. NERA reports sharp electri city prices increases inconsistent with EPA’s projections of the final rule and erroneously assumes zero benefits of the CPP in it modeling. See response to comment 5 in section 8.6 for more discussion of alternative analyses.

Comment 27 : Commenters contended that EPA did not conduct a c umulative impact analysis of proposed rule plus other EPA rules

. Several commenters stated that EPA has not considered the combined impact of the proposed rule along with other EPA and environmental regulations.

Commen ters stated that the cost of this rule is additive to the costs from several other EPA rules, such as the Mercury MACT rule, the Refinery Sector Rule proposal and the Cross State Air Pollution Rule. Further still, the EPA will implement lower ozone standar ds by 2015. The commenters stated that even before the regulation's requirements are taken into account, seven of the EPA's final or pending regulations are projected to cost the economy more than $60 billion per year in lost GDP and will cause the annual loss of nearly 900,000 jobs.

Commenters stated that EPA has failed to consider the cumulative impact of its proposal along with the other numerous and costly rules that directly impact the utility industry. The commenters provided the following list of th e more prominent rules at issue:

• 2010 National Ambient Air Quality Standard for NO2;

• 2010 National Ambient Air Quality Standard for SO2;

• 2014 National Ambient Air Quality Standard for ozone;414 • 2011 National Ambient Air Quality Standard for PM2.5;

• 2011 Cross State Air Pollution Rule;

• 2012 and 2013 Revisions to the Cross State Air Pollution Rule;

• 2011 Industrial Boiler MACT;

• Regional Haze Rule;

• Greenhouse Gas PSD and Title V permitting;

• Greenhouse Gas NSPS;

• 2010 revisions to 40 CFR 63, Subpart ZZZZ;

• 316(b) Cooling Water Intake structures;

• Steam Electric Effluent Guidelines;

• Numeric Nutrient Criteria;

• Total Maximum Daily Load rules; and

• Coal Combustion Residuals.

The commenters stated that the failure to consider the cumulative impacts of these rules is in di rect contradiction to Executive Order 13563 that each agency must propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs, tailor its regulations to impose the least burden on society taking into account the cos ts of cumulative regulations. The commenters stated that EPA must conduct this cumulative impact analysis, and provide the public with an opportunity for review and comment.

Commenters stated that EPA's projected average retail electric price increases for the proposed CPP rule in 2020 is highly uncertain because it assumes that states will follow EPA's prescribed building blocks approach to emission reductions and are in addition to a 3.1% average national price increase in 2015 for compliance with EPA's 2 011 Mercury and Air Toxics Standards rule (EPA MATS RIA, Table 3

- 12).

Commenters stated that a March 2014 analysis by National Economic Research Associates of a CO2 reduction proposal similar to the EPA Clean Power rule estimated national average resident ial electricity price increases of 3.0 to 11.4 percent over 2018

- 2033, depending upon the degree of flexibility in implementation (NERA/ACCCE, March 2014). The commenters stated that these price increases are in addition to those expected in 2015

- 2017 due to the implementation of the EPA mercury rule.

Response 27: The EPA conducted a Regulatory Impact Analysis (RIA) assessing the costs and benefits of the Clean Power Plan proposal and final guidelines consistent with the requirements415 of E.O. 12866 and E.O. 13563 for illustrative compliance scenarios . The RIA shows that the Clean Power Plan is beneficial to society and that the benefits far outweigh the costs for the illustrative scenarios analyzed. The EPA recognizes that states will make the ultimate decisi ons in their implementation planning process of actions that will be taken by EGUs to comply with the CPP. States are free to choose alternative implementation approaches that may lower costs and or increase the benefits of the CPP to society beyond those estimated by EPA as long as the state goals are met.

The Integrated Planning Model (IPM) was used to estimate the emission reductions and costs associated with the guidelines. All promulgated EPA regulations affecting the power sector are incorporated into the baseline of IPM for development of the emission reductions, costs, and benefits for the guidelines. (See docket EPA

- HQ

- OAR

- 2013

- 0602 for the RIA conducted for the proposed and final emission guidelines and more details on the analysis conducted.) The final Clean Power Plan establishes emission guidelines for states to use in developing plans to address greenhouse gas emissions from existing fossil fuel

- fired EGUs. Specifically, the EPA establishes
state

- specific goals for carbon dioxide emissions from the power sector, as well as emission guidelines for states to use in developing plans to attain the state

- specific goals. Because states will ultimately make the decisions as to implementation of the guidelines, the RIA reflects illustrative benefits and costs. The guidelines set in motion actions to lower the carbon dioxide emissions associated with existing power generation sources in the United States.

The EPA recognizes that each state has different policy considerations, including varying emission re duction opportunities and existing state programs and measures, and characteristics of the electricity system (e.g., utility regulatory structure, generation mix, electricity demand). The final emission guidelines provide states with options for establishi ng standards of performance in a manner that accommodates a diverse range of state approaches. The proposed guidelines would also allow states to collaborate and to demonstrate emission performance on a multi

- state basis, in recognition of the fact that el ectricity is transmitted across state lines, and local measures often impact regional EGU CO2 emissions.