A RT G RAHAM C HAIRMAN 

### S TATE OF 

### F LORIDA Capital Circle Office Center
2540 Shumard Oak Boulevard Tallahassee, FL 32399-0850 (850) 413-6040



# Public Service Commission

July 15, 2011

The Honorable Marco Rubio
United States Senate B40A Dirksen Senate Office Building Washington, DC 20510

Re: Environmental Protection Agency Rulemaki ngs on Clean Air Act Toxics and on Cooling
Water Intake Facilities

Dear Senator Rubio:

The Florida Public Service Commission (FPSC ) is charged with ensuring that Florida’s electric utilities provide safe, re liable energy for Florida’s consumer s in a cost-effective manner. We
therefore believe it is cr itical to write regarding the Envi ronmental Protection Agency’s (EPA) proposed rules. While we recogni ze the necessity to address the public health and environmental

measures, we are concerne d that the Electric Util ity Air Toxics rule and the Cooling Water Intake Structures rule have the potential for significan t rate and reliability im pacts on Florida’s energy
consumers. To lessen this impact, we urged the EPA in the encl osed comments to allow the maximum compliance flexibility provided under the Clean Ai r Act and Clean Water Act so that utilities may choose the most efficient, least-cost compliance opt ions to meet the goals.

Pursuant to Florida law, Flor ida’s investor-owned electric ut ilities may petition the FPSC for recovery from ratepayers for prudently incurred costs required to comply with new environmental requirements. Recovery of complia nce costs for the new rulemakings through a cost r ecovery clause
will have a near immediate rate impact on Florida’s consumers. Preliminary estimates by Florida’s investor-owned utilities anticipa te a range of potenti al total costs of be tween $4.4 billion to $6.7 billion to comply with EPA’s propos ed Utility Air Toxics and Cooli ng Water Intake Structures rule
amendments.

Proposed Utility Air Toxics Rule

Approximately 27 percent of Fl orida’s electricity n eeds are currently met with coal- and oilfired generation, the genera tion resources subjec t to the proposed Air Toxics rule. It appears that significant controls would be necessary at many of these units , and some units would be at risk of
forced retirement. The FPSC is particularly concerne d that there is a three year comp liance time line, with a potential one year extension, of the proposed rule. Some of the control techno logies that would allow utilities to comply would take two to four years for design and installa tion. It is our understanding that it is the Federal law that requ ires this time line. With many utilities vying for the

An Affirmative Action / Equal Opportunity Employer PSC Website: http://www.floridapsc.com Chairman.Graham@psc.state.fl.ussame equipment and specialized labo r, it is to be expected that there will be price pressure, and potentially shortages, on compliance technologies and skilled la bor. This would cau se a significant cost impact on ratepayers and a potential impact on reli ability. We ask Congress to encourage the EPA to use the maximum flexibility set forth in the Clean Air Act in providing adequate time to attain compliance to minimize the impacts to ratepayers.

Proposed Cooling Water In take Structures Rule

One of the FPSC’s primary concer ns about this rule is that EPA does not provide for a costbenefit analysis for utilities su bject to the impingement standard . The FPSC urges flexibility in compliance options. In some instances , Florida utilities have suggested that the lowest cost option to meet the impingement standards ma y be a cooling tower because the standard cannot be met with screens and intake velocity canno t be reduced sufficiently without a closed loop cooling system. Some generating facilities in Florida appear not to have sufficient land to install such systems and this could have reliability implications. For this reason, we urge there to be a cost-benefit analysis on the impingement standards.

The National Association of Regulatory U tility Commissioners a dopted the enclosed resolution. The FPSC supports the general principles in th e resolution, which include:

 Avoid compromising sy stem reliability;

 Minimize cost impacts to consumers;

 Provide an appropri ate degree of flexibility and timeframes for compliance;

 Recognize the needs of each state and region to deploy a portfolio of cost-effective supply and
demand-side resources based on unique circumstances;

 Employ rigorous cost-benef it analysis consistent with federal la w, in order to ensure sound public policy outcomes.

In conclusion, the FPSC has concerns with the proposed EPA rules as discussed above. We recognize that in some inst ances the EPA must adhere to deadline s established in the law, such as those for the Air Toxics rule. However, we as k that Congress encourage EPA to use the maximum flexibility and discretion already provided in the Cl ean Air Act to allow adeq uate and reasonable time for regulated utilities to comply w ith these new rules. We also urge Congress to suppo rt a cost-benefit analysis for the impingement stan dards in the Cooling Water Intake Structures rule, where EPA has the flexibility to do so.

Thank you for consider ing our concerns.

Sincerely,

Art Graham
Chairman

AG/CM
Enclosure: FPSC Comments to the Environmental Protection Agency with NARUC Resolution