Some problems possible with EPA climate rule, energy regulators say

Members of the Federal Energy Regulatory Commission (FERC) largely refused Tuesday to speculate on the cost and reliability impacts from from the Environmental Protection Agency’s (EPA) climate rule, but said some challenges are possible.

FERC commissioners said it is imperative that EPA work closely with them throughout the rule’s development and implementation to make sure the commission can carry out its duties to ensure reliable electricity at a reasonable cost.

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“You aren’t going to be able to prove whether is or isn’t going to work, because it’s still in development,” said John Norris, a commissioner. “But the key things moving forward are communication and cooperation between EPA, FERC, [the North American Electric Reliability Corporation] and all the other entities.”

Norris and the three other FERC members spoke at a hearing of the House Energy and Commerce Committee’s subcommittee on energy and power Tuesday. Norman Bay, currently head of FERC’s enforcement office, has been confirmed by the Senate as the fifth commissioner, but not sworn in.

He also appeared at the hearing, but said he knew relatively little about FERC’s involvement with the rule.

“It’s going to take an ongoing effort and communication to identify issues that specific states or regions might be having,” said Cheryl LaFleur, the commission’s acting chairwoman.

Republicans on the panel made it obvious that they wanted the commissioners to say that the EPA rule, which aims to reduce carbon emissions from power plants by 30 percent in 2030, would significantly harm electricity reliability or increase energy costs. But while they identified some issues, none fully said the rule would not work.

“EPA does not have the expertise on the intricacies of electric markets and the reliability implications of this radical transformation they’re proposing for the electric generation sector,” Rep. Ed Whitfield (R-Ky.), the panel’s chairman, said in his opening remarks.

“Maintaining diversity — both diversity in our electricity generation portfolio as well as a diversity of strategies for meeting a state’s electricity needs — is critical to affordable and reliable energy,” said Rep. Fred Upton (R-Mich.), chairman of the full energy panel. “But EPA’s top-down Clean Power Plan will give us less of both kinds of diversity.”

After the hearing, EPA spokeswoman Liz Purchia said her agency plans to collaborate with FERC on the power plant rule in a similar way to how they work together on the EPA’s mercury and air toxics standards (MATS) rule for power plants in 2011.

“Our working relationship with FERC on MATS implementation has been highly beneficial and we look forward of finding similar opportunities as we work to develop and implement the clean power plan,” Purchia said.

Commissioner Philip Moeller gave the harshest criticism of the rule, but did not say it was completely unworkable.

“The biggest challenge in this rule, I think, is that it treats states individually for compliance. But electricity markets are fundamentally interstate in nature,” Moeller said. “So that could create some challenges that may not be insurmountable, but need to be looked at very closely.”

Moeller also said the rule could lead regulators to dispatch power plants based on their emissions. But FERC requires that plants are dispatched based on the lowest costs.

Commissioner Tony Clark joined most of his colleagues in reserving ultimate judgment of the rule as a whole. EPA is still working on the rule, and states have not begun to consider how to comply.

“It’s probably too early to know with specificity exactly what those impacts would be,” Clark said. “We simply don’t know what the potential state implementation plans might provide.”

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