HOLIDAY READING: MESSING WITH TEXAS: CAN THE STATE BLOCK THE EPA'S CLEAN POWER PLAN?

Messing with Texas: Can the state block the EPA's Clean Power Plan?; Lawmakers don't want to comply, but some fear a federal plan would be worse than playing along

Herman K. Trabish, May 15, 2015 (Utility Dive)

click to enlarge

Lone Star State legislators think they have devised a way to keep the Obama administration’s Clean Power Plan (CPP) from messing with Texas.

But their opponents worry the legislators’ bill — Senate Concurrent Resolution 27 (SCR 27) — and other efforts to block or skirt the rules will end up allowing the EPA to exert even harsher cuts and more plant retirements than if the state played along with the plan.

“Presented SCR 27 to the Senate's Natural Resources & Economic Development Committee to fight overreaching EPA regulation,” Republican State Senator Kelly Hancock recently posted to Facebook. “The EPA's Clean Power Plan amounts to a federal takeover of the Texas electric grid under the guise of greenhouse gas emission reduction. Not on our watch.”

Hancock joins a long list of CPP opponents that includes the Attorneys General from 15 states already suing the EPA for exceeding its authority. Oklahoma’s Governor Mary Fallin recently signed an executive order declaring her statewould not file a compliance plan.

Texas Attorney General Ken Paxton also recently announced a separate legal action.

“I will fight this ill-conceived effort that threatens the livelihood and quality of life of all Texans,” he said, despite the fact that previous Texas challenges to EPA authority have floundered and cost the AG’s office over $400,000.

click to enlarge

SCR 27

Under Tenth Amendment protection, “…any regulation necessary to ensure a reliable and affordable supply of electricity for citizens is the sole authority of each state,” Hancock’s SCR 27 asserts. But “the proposed rule would effectively amount to a federal takeover of the entire system of electric power in the United States and significantly impede if not destroy constitutional constraints on federal powers…”

The legislation directs Texas environmental and energy regulators “not to prepare, draft, submit, or execute a state plan under the rule, take any action that assists in the implementation of a state or federal plan, or acknowledge the legality of the Section 111(d) rule unless or until the rule has been fully and finally resolved on judicial review."

That means Texas would not submit a state implementation plan (SIP) to the EPA until all of the legal wrangling over the Clean Power Plan was resolved, a process that will likely take years.

Environmentalists, naturally, are not pleased.

Passing SCR 27 would be “like going into battle with no contingency plan,” responded Environmental Defense Fund Texas Clean Energy Program Manager Kate Zerrenner.

By hamstringing the the Public Utilities Commission of Texas (PUCT) and the Texas Commission on Environmental Quality (TCEQ), the two regulatory bodies responsible for designing an SIP, “this resolution puts the state’s economy in jeopardy and the power sector in uncertain territory,” she said.

Sen. Hancock's office did not respond to repeated requests for comment.

But, while clean energy advocates would love to see the regulators put together a state plan, it appears the regulators themselves don't want the emissions cuts either. In its December filing to the EPA on the CPP, the Texas Commission on Environmental Quality (TCEQ) expressed unequivocal opposition to the federal emissions plan.

“Texas will be severely and disproportionately impacted,” it asserted. “Texas has made extraordinary efforts in developing a diversified energy generation mix and in becoming the nation’s leader in renewable wind energy generation, yet the EPA’s proposal actually penalizes the state for making these efforts.”

TCEQ also objected to the proposed plan’s costs and called the timeline “unreasonable and unworkable.”

The PUCT’s foremost concern, it wrote in its December filing with the EPA, is that the plan “will create significant electric reliability problems in Texas.” The filing called the 43% emissions reduction for Texas “arbitrary and unreasonable,” and said achieving it would cost the state “$10-$15 billion” in total annual compliance costs by 2030, “in excess of $10 billion” for total Texas electricity-related costs, and “$3 billion per year to comply with the energy efficiency mandate.”

SCR 27 doesn’t have the power of law but it is “a statement of intent to agencies already not inclined to comply unless they are specifically told to,” Zerrenner said. If it passes, “it would be a binding order on TCEQ and the PUCT to not take action.”

Even if Texas lawmakers oppose the CPP, she added, they should be thinking about a plan that makes the most of the state’s wind, solar, energy efficiency, and natural gas resources. “If not, they are inviting EPA to come in and implement a program for us.”

click to enlarge

What will the EPA do?

“It is EPA’s strong preference that states submit their own plans so they can take full advantage of the choices the rule provides,” EPA spokesperson Liz Purchia told Utility Dive.

“The goal is to reduce the carbon pollution emitted for each megawatt-hour of electricity generated. That provides power with less pollution,” EPA Acting Assistant Administrator Janet McCabe recently explained in a blog post. EPA specified four “commonly used, technically sound, affordable” measures that states can use to decrease their emissions.

Together, they comprise the four building blocks of the plan:

improving efficiency at existing coal plants

increasing the use of existing natural gas plants

expanding the use of wind, solar, nuclear and/or other low- or zero-emissions generation

increasing the use of energy efficiency

“These aren’t the only approaches that states can use, but EPA determined that — taken together — they are the best system of emission reduction, as that term is defined in the Clean Air Act,” McCabe wrote. Once a state’s emissions reductions goal is set, “it is free to meet that goal in the way that works best.”

Regional coordination between states on compliance can help “avoid plans that are counterproductive to each other,” according to a new report from the National Association of Regulatory Utility Commissioners. Regional transmission operator PJM Interconnection concluded regional collaboration on compliance in its territory can cut costs by almost 30%, from an estimated $45 billion in 2020 to $35 billion.

If the EPA does not get an “approvable” plan from a state by the deadline in 2016 to be set when the plan is finalized, it will design a federal implementation plan (FIP) that the state will have to follow.

Zerrenner's concern is that if Hancock's bill passes, Texas won't meet the 2016 deadline and will be at the mercy of a federally-imposed plan, one that may not account for the specific needs of the Texas the way an SIP would.

“TCEQ has a staff dedicated to Texas. EPA has a few people dedicated to the region. If they have to come up with a plan, they will probably do what is easiest, which is shut down coal plants,” Zerrenner said. “This SCR would make it impossible to get even the bones of a plan in place before the rule is final ,so we would not be able to even get an extension.

Texas debates compliance

While environmentalists may want Texas to put together a state plan, the state's energy stakeholders seem firmly aligned against them.

“[The Clean Power Plan] will wreck the Texas economy,” Texas Public Policy Foundation’s Tom Lindsay told a recent hearing of the Senate Natural Resources and Economic Development.

“This is about the federal government taking over our grid,” added Balanced Energy for Texas General Counsel Michael Nasi.

The Attorney General’s lawsuit can succeed this time, Texas Public Policy Institute’s Leigh Thompson said, asserting the Supreme Court will rule against a “gun-to-the-head” plan that forces states to choose between a “terrible state plan” and a “terrible federal plan.”

“It seems to target Texas,” observed Republican Senator Troy Fraser, the committee Chair. “The carbon footprint in Texas had gone down more than any other state and any other nation. I am bullish on renewables but Texas is not being given credit for what it has done.”

Fraser agreed the courts would rule against the EPA, but by that time “coal plants will be shut down.”

“It penalizes the state for its accomplishments in renewable energy because it requires us to grow our emissions reductions off the base we now have so that what the state has already done doesn’t count,” explained the PUCT Executive Director Brian Lloyd.

It also increases the cost of energy efficiency to consumers by “an order of magnitude,” Lloyd added. “The utilities spend about $100 million per year for energy efficiency incentives but what the rule requires would make that $1 billion. That is not something we have the authority to do.”

Democratic Senator Judith Zaffirini asked hearing witnesses about the consequences of making Texas subject to a federal plan rather than a state plan.

Texas has cut its carbon footprint but is still generates a lot of power plant emissions and the EPA’s reduction target accounts for both, Zerrenner said.

“Senator Fraser is concerned about getting proper credit," she said, "and if we participate in the planning process, we are more likely to make that happen.” Fraser, like Hancock, did not respond to repeated requests for comment.

“Texas is number one in the U.S. in power plant emissions and emits more than number two and number three combined,” explained Environment Texas’ Luke Metzger. The CPP will benefit Texas health and economy and “it will not be difficult to comply” because Texas will have 20% renewables by the interim target date of 2020.

“But timing is critical,” Metzger said. “If we refuse, we will be left at the mercy of the federal plan which might not take advantage of Texas renewables.”

“We can get to about 75% of compliance by doing nothing because of our current trends,” Zerrenner said. “By ramping up the things we are already doing, we can comply with more of our own wind and our almost untapped solar and energy efficiency resources. But EPA would most likely just replace coal with natural gas.”

There is a concern the EPA is telling Texas what to do, Zerrenner said.

“If you don’t want EPA to tell you want to do, then do it yourself."

Editor's Note: SCR 27 was kept in committee. Legal challenges to the CPP continue with the Texas Attorney General as a complainant.

Tweet