Clean Power Plan Clean Air Act 111(d) and 111(b) Rule. A Quick Comparison of What Changed

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1 Clean Power Plan Clean Air Act 111(d) and 111(b) Rule A Quick Comparison of What Changed Anda Ray Environment, VP and Chief Sustainability Officer August 4, 2015 San Francisco, CA

2 Clean Air Act (CAA) Final Rules September 20, 2013 Clean Air Act (CAA) 111(b) proposed rule issued Applies to new, modified and reconstructed generating units June 2, 2014 Clean Air Act (CAA) 111(d) proposed rule issued Applies to existing sources (aka Clean Power Plan ) Over 4.3 million comments August 3, 2015 Final Rules issues: CAA 111(b) and 111(d), and Federal Implementation Plan for 111(d) 2

3 Initial Reflections on the Final 111(b) Rule for New Sources Less Stringent Emissions Limit Coal: 1000 lb/mwh-gross 1400 lb/mwh Gas: 1000 lb/mwh-gross (no change) CCS is not required, but reaffirmed it is a Best System of Emissions Reduction (BSER) Other Compliant technologies might now include options without CCS Ultra-super critical coal with gas co-firing IGCC with partial separation of CO 2 or gas co-firing Citing high costs of 50% carbon capture required by the proposed rule Less Stringent Emissions Limits 3

4 Initial Reflections on the Final 111(d) Rule for Existing Sources Building Blocks The Best System of Emission Reduction (BSER) Coal Units Heat Rate Improvements NGCC Units Redispatch Expansion of Renewable and Nuclear Energy Use of Energy Efficiency Heat Rate NGCC Nuclear Power Renewable 6% Range: 2.1%, 2.3% and 4.3% (~ 30% to 50% lower) Re-dispatch Coal to Existing 70% CF Nameplate 75% CF Net Summer New NGCC is not a BSER for direct replacement of coal [New NGCC is under 111(b)] Conversion of Coal plant to Gas plant is a compliance option Biomass (co-firing or other) still not considered No longer used in setting goals (Not a BSER) New, in-construction and uprates can be used in compliance New renewable energy plays larger role in goal setting optimized costs Clean Energy Incentive Plan (CEIP): Allowances or Emissions Reduction Credit Incentive for early adoption Emissions Reduction Credits (ERCs) Energy Efficiency No longer used in goal setting, but still valid for compliance Incentive for early adoption. ERCs accrued in After State Plan submitted Additional incentives for investments in low-income communities 4

5 Initial Reflections on the Final 111(d) Rule for Existing Sources Continued Other Aspects of the Rule WA 87% EPA Estimated CO2 Reduction by State 2005 to 2030 MT 1% OR 55% ID 56% WY 18% NV 65% UT 22% CO 19% CA -17% ME 95% ND -4% MN 60% NH 80% VT MA 69% SD 1% WI 41% NY 70% MI 24% RI -101% IA 23% PA 30% NE -43% CT 55% OH 24% NJ 58% IL 20% MD 37% IN 21% WV 15% DE 72% KS -1% VA 67% MO -10% KY -6% AZ 39% NM 6% OK 37% AR 19% TN 36% NC 33% SC 47% 0% 1% - 25% 26% - 50% > 50% TX 38% MS GA 43% 55%AL 32% LA 42% FL 31% Compliance Date CO 2 Target in % 32% (Below 2005) Glide path smoother (no cliff in first year) Must have step-downs Smoother glide path, helps to prevent rush to gas Other (non-bser) Compliance Options State Interactions Reliability Other Renewables, Demand Energy Efficiency, Combined Heat and Power, Waste Energy, Transmission & Distribution Improvements (Transportation Electrification, specifically excluded as compliance) Trading Ready under mass approach, could opt in when market ready Interstate/regional agreements no longer required States responsible to demonstrate reliability maintained Safety Valve in the event that actions under this rule impact system reliability Health co-benefits preserved (requires additional analysis) Continued role for Social Cost of Carbon 5

6 Selected State Comparison Needs More Analysis! Goals tightened in carbonintensive states Goals loosened in less carbonintensive states Changes in State 2030 Goal Proposed Rule (lbs/mwh) Final Rule (lbs/mwh) West Virginia North Dakota Kentucky Washington California Arizona More Narrow Range of State Emissions Note: No targets for Alaska, Hawaii, Puerto Rico, Guam Will come later 6

7 Clean Power Plan Cost and Benefits Co-Benefits (Particulates, etc.) Climate Benefits (Includes Social Cost of Carbon) Summary Monetized Cost & Benefits in 2030 (billions of 2011 USD) Proposed Rule Final Rule $23 to $62 $11 to $34 $30 $20 Power Sector Costs ($7) to ($9) ($5) to ($8) NET $46 to $84 $25 to $45 Benefits Decreased, Primarily due to Changing Assumptions 7

8 Initial Reflections on the CAA 111(d) Federal Plan Proposed 90-day Comment Period Plan for final rule by summer 2016 EPA would promulgate a federal plan in any state that does not submit an approvable plan and then implement the plan on power companies. EPA is proposing and seeking comment on: 1. A rate-based federal plan for each state based on model rule 2. A mass-based federal plan for each state based on model rule EPA intends to finalize a single federal plan type (rate or mass) based on comments. 8

9 9 EPRI Relevant Programs Sector No. Program Environment Generation Nuclear 41 Nuclear Programs Power Delivery & Utilization Distribution Utilization Power Delivery & Utilization Transmission Energy and Climate Policy Energy & Environmental Policy Analysis and Company Strategy Market Analysis and Integrated Portfolio Planning Fossil Fleet for Tomorrow CO 2 Capture, Utilization and Storage Combined Cycle Turbomachinery Combined Cycle HRSG and Balance of Plant Heat Rate Improvement Renewable Generation Integration of Distributed Energy Resources Distribution Systems Electric Transportation Energy Storage and Distributed Generation End-Use Energy Efficiency and Demand Response Understanding Electric Utility Customers Electrification for Customer Productivity Grid Operations Grid Planning Bulk Power System Integration of Variable Generation Supplemental 103 Specific State Analysis and Research on the Clean Power Plan CAA Sec. 111 (d) EPRI Role: 1. Inform Public Policy 2. Identify and Act on Research Needs 3. Support Members through EPRI Analysis

10 Final Rule Instant Take Away Evolution of the Final Plan 1. Higher Emissions Rates for New Fossil 111(b) 2. Carbon Reduction Goal is higher 111(d) 3. New NGCC s now excluded from rate-based plans 4. Nuclear out for goal setting, but some role for compliance 5. Safety Valve for Reliability included. 6. Energy Efficiency no longer part of target, but still part of compliance 7. Guidance on trading credits across state lines Trading Ready date extended to 2022 and glide path for future years more smooth Slows the Dash for Gas 9. Mass approach gets more full billing and EPA support Compliance Sept 6, 2016 Sept 8, Turn in State Plan Final State Plans Due Opportunity for Emissions Reduction Credit Three Multi-year Step Downs