On October 23, 2015, the U.S. Environmental Protection Agency (EPA) released the final version of its regulations to reduce greenhouse gas (GHG) emissions from existing power plants (also referred to as electric generating units or EGUs). Since carbon dioxide (CO 2 ) from fossil fuel combustion is the primary source of GHG emissions, and fossil fuels are used for the majority of electric power generation, reducing CO 2 emissions from power plants plays a key role in the Administration's climate change policy. CO 2 emissions are linked to anthropogenic climate change, and the EPA cites the Obama Administration's intent to address climate change concerns. Under the provisions of the Clean Power Plan (CPP), most existing fossil fuel-fired electric power generation plants will be subject to state-specific targets to reduce carbon emissions. The combined state targets are expected to result in reducing CO 2 emissions from power generation in the United States approximately 32% by 2030 as compared to 2005 levels. To meet CPP goals, EPA has established a national CO 2 emissions performance rate for fossil fuel-fired electric steam generating units (generally, coal- and oil-fired power plants), and for stationary combustion turbines (generally, natural gas-fired combined cycle generating units). EPA is also giving each state a specific CO 2 emissions rate based on these national performance rates and the state's existing power generation portfolio. EPA believes that the CPP will "protect human health and the environment by reducing CO 2 emissions from fossil fuel-fired power plants in the U.S." Mandatory compliance with the CPP begins in 2022, with final compliance with state CO 2 emissions or emission rate targets set for 2030. This report presents an analysis of EPA's Clean Power Plan in the context of the electric power sector. The full implications of implementing the CPP are unlikely to be known until after the states file their compliance plans, which are due by September 6, 2016 (although an extension to 2018 is available to allow for the completion of stakeholder and administrative processes). The discussion of issues for Congress in this report will be focused on the implications of the CPP on electric power system reliability, the costs of electric power to customers, and the future structure of the electric utility industry which could result from implementation of state compliance plans. Burning fossil fuels to produce electricity results in the release of CO 2 , and represents the largest source of GHG emissions in the United States. As shown in Figure 1 , fossil fuel combustion was responsible for approximately 68% of electric power generation as of 2012. Coal was the fuel most used. Coal is also the fossil fuel which emits the most carbon dioxide per unit of electric power produced, averaging 216 pounds of carbon dioxide per million British thermal units (mmBTUs) of energy produced. By comparison, natural gas combustion releases about half the carbon emissions at 117 pounds of carbon dioxide per mmBTU of energy produced. In a 2007 decision, the Supreme Court found in Massachusetts vs. EPA that GHG emissions were air pollutants which could be regulated under the Clean Air Act (CAA). EPA then moved in 2009 to declare that GHGs were a threat to public health and welfare in an "endangerment" finding, which served as a basis for subsequent actions from the agency. With regard to stationary sources of GHGs, EPA proposed new source performance standards (NSPS) in September 2013 for the control of CO 2 emissions from new electric power plants burning fossil fuels under CAA Section 111(b) regulations. These standards were finalized in October 2015. With the NSPS promulgated in October 2015, EPA issued guidelines under CAA Section 111(d) for the control of CO 2 emissions from existing power plants burning fossil fuels. The standard of performance for existing sources is to reflect the degree of emissions limitation achievable through the application of the best system of emission reductions (BSER) that is "adequately demonstrated" and available to reduce pollution. The provisions under CAA 111(d) allow EPA to set goals, and gives states the responsibility for creating compliance plans which meet EPA's guidelines. EPA's Clean Power Plan establishes interim and final CO 2 emission performance rates for fossil fuel-fired steam electric generating units and natural gas-fired combined cycle electric generating units. Based on these performance rates, EPA calculated for each state a rate-based CO 2 emissions goal (measured in pounds of CO 2 per Megawatt-hour (lbs CO 2 /MWh)) and a mass-based state goal (measured in total short tons of CO 2 ). A state must implement an EPA-approved plan to ensure that power plants individually, in aggregate, or in combination with other measures undertaken by the state, achieve the equivalent of the interim CO 2 emissions performance rates (over the "glide path" period of 2022 to 2029), and the final CO 2 performance rates, rate-based goals or mass-based goals by 2030. EPA outlines goals in the CPP for CO 2 reduction by establishing its best system of emissions reduction. The BSER is based upon three "building blocks" which EPA says are available to all affected EGUs, either through direct investment or operational shifts or through emissions trading. Building Block 1 : Improving the heat rate at affected coal-fired steam EGUs. Building Block 2 : Substituting increased generation from lower-emitting existing natural gas combined cycle (NGCC) units for reduced generation from higher-emitting (primarily coal-fired) affected steam generating units. Building Block 3 : Substituting increased generation from new zero-emitting renewable energy generating capacity for reduced generation from affected fossil fuel-fired generating units. All three building blocks are based on "inside the fence line" (i.e., EGU-focused) actions to reduce CO 2 emissions or emissions rates. EPA used the building blocks to create national performance rates for two subcategories of affected EGUs: fossil fuel-fired electric utility steam generating units and stationary combustion turbines. For fossil fuel-fired (i.e., mostly coal- and oil-fueled) steam generating units, an emission performance rate of 1,305 pounds of CO 2 per Megawatt-hour (lbs CO 2 /MWh) is established. For stationary combustion turbines (identified by EPA as NGCC units), the performance rate is 771 lbs CO 2 /MWh. EPA believes that a transition period from 2022 to 2029 will allow for states to achieve these final performance rates by 2030. In turn, EPA used the national performance rates to establish specific CO 2 reduction targets for each state based on each state's "historical blend" of fossil-fueled steam and NGCC generation. EPA believes that the ranges of CO 2 emissions reduction at coal, oil, and gas power plants can be achieved at a "reasonable cost" by application of the building blocks to a state's power generation portfolio. EPA is allowing states to choose how to meet their CO 2 emissions compliance goals, using rate-based goals (measured in lbs CO 2 /MWh) or mass-based goals (measured in total short tons of CO 2 ). In addition, states can meet their goals using an emission standard plan or a state measures plan. The "emissions standard approach" is based on the EGU-specific requirements so that all affected EGUs will meet their emission performance rates or equivalent mass-based goals. States can also choose a "state measures approach" using a mixture of state-enforceable measures (such as a renewable electricity standard and programs for improvement of energy efficiency) to achieve (on aggregate) equivalent emissions or emission rate reductions. If a state measures approach is chosen, the plan must also include a "contingent backstop of federally enforceable emission standards for affected EGUs that fully meet the emission guidelines and that would be triggered if the plan failed to achieve the required emission reductions on schedule." States will also be able to formulate their own plans to reduce CO 2 emissions (as opposed to using the BSER), and can use an integrated resource plan (IRP) or other method. However, if they choose to implement their own plan they will have to include a timeline and process for reporting to ensure that the state's affected EGUs achieve the equivalent of the interim and final CO 2 emission performance rates between 2022 and 2029 and by 2030. States can also join existing or form new regional emission trading programs with other states for compliance purposes. EPA has promulgated each state's goal as a specific CO 2 mass goal as a way for states to implement mass-based trading. Some states have expressed a view that mass-based trading has significant advantages over rate-based trading. States must decide whether to allow emissions trading, or require EGUs to meet specific CO 2 emission performance rates or a state "portfolio" measure, which can be rate- or mass-based. Depending on what the state plan allows, the owners of EGUs may be responsible for deciding how these requirements will be met (i.e., by application of the BSER or purchase of emission allowances). EPA encourages investments in renewable electricity projects and demand-side energy efficiency (DSEE) in lower-income communities in 2020 and 2021. Under the Clean Energy Incentive Program (CEIP), established in the CPP final rule, EPA can award (a limited number of) matching allowances for renewable electricity projects that begin construction after participating states submit their final implementation plans. Energy efficiency projects in low-income communities are also eligible under the CEIP for double credits. Through this program ... states will have the opportunity to award allowances and [emissions rate credits (ERCs)] to qualified providers that make early investments in [renewable energy (RE)], as well as in demand-side [energy efficiency (EE)] programs implemented in low-income communities. Those states that take advantage of this option will be eligible to receive from the EPA matching allowances or ERCs, up to a total for all states that represents the equivalent of 300 million short tons of CO 2 emissions.