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Over 1,000 fossil plants could see changes under Clean Power Plan


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Over 1,000 fossil plants could see changes under Clean Power Plan

Over1,000 coal- and natural gas-fired power plants were subject to the Clean PowerPlan before the U.S. Supreme Court agreed to stay the rule, rendering it unenforceable for the timebeing.

Manyutilities indicatedthat they will proceed with preparing for a low carbon future anyway, and thatthe stay has little practical effect on their generation fleet decisions.Meanwhile, some states, including New York, California and Virginia, havecontinued vigorous planningfor the rule and intend to submit a plan to the EPA. Others states have ceasedplanning for the rule altogether, while others are continuing to participate inconversations aboutpossible compliance strategies but are not actively developing a complianceplan.

TheClean Power Plan established state-by-state carbon dioxide emission standardsfor existing fossil fuel-fired electric generating units with the goal ofcutting CO2 emissions 32% as measured from a 2005 baseline by 2030. States haveflexibility to choose a plan that meets their individual needs, andimplementation was slated to begin in 2022 with full compliance required in2030.

Resourcesfor the Future Fellow Daniel Shawhan said if the court ultimately upholds theClean Power Plan the rule will impact the nation's generation fleet in a numberof ways. Some plants may be induced to run less often, some will have to becomemore efficient, and some may even shut down because of the rule. Conversely,more efficient and lower emitting power plants, such as newer natural gascombined-cycle facilities, may run more often.

Thecarbon rule also encourages states to adopt an emissions trading program. Infact, the federal implementation plan, or FIP, that the EPA is developing forstates that do not want to develop their own compliance plans will rely heavilyon emissions trading. The model trading rules, also being developed as a toolthat states can use to ease compliance planning, are built to encourageseamless trading across the widest range of states possible. Many experts havesaid the bigger the trading pool, the cheapera trading program is, and Shawhan said regional groupings would also help keepprices predictable.

Shawhansaid power plants that become subject to a trading program will have anincentive to reduce their emissions because they will have to buy an allowance,or forego selling an allowance, for each ton of carbon they emit. If a statedoes not adopt a trading program, Shawhan said power plants will have lessflexibility to adhere to the emissions limits.

Severalstates, including California, already have carbon trading programs. In theNortheast, Connecticut, Delaware, Maine, Massachusetts, Maryland, NewHampshire, New York, Rhode Island and Vermont intend to leverage the existingRegional Greenhouse Gas Initiative trading program for Clean Power Plancompliance.

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Shawhansaid that when rolling out new trading programs, power plants previously haveraised the asking price submitted in their regional power auctions each day tocover the cost of the allowances they need for each ton of CO2 emitted whileoperating.

Instates where the EPA ultimately imposes a FIP, Shawhan said power plants wouldbe allowed to begin trading as a means of compliance with the carbon rule'semissions limits.

"Allowingemission trading allows each plant to customize its emissions to its needs. Itcan produce the amount of power that makes sense for it in light of theemission allowance price," Shawhan said.

Stateshave argued in thelitigation against the rule that the Clean Power Plan "usurps" states'authority to manage their own electricity system. The EPA has responded thatthe rule uses "cooperative federalism" to allow states to be incharge of their own energy future.

Consideringthe EPA's authority to impose a federal plan, Shawhan said generators maychoose to make changes that require the approval of state regulatory agencies.Building or expanding a low emitting plant, or retiring a high emitting plantwould be examples.

More than 1,000 power plants

Aspart of developing the Clean Power Plan, the EPA listed all of the power plantssubject to the rule, with some generators more impacted than others.

, for example,has 15,366 MW of coal-fired generation that may need to make changes if therule proceeds as is. Those include seven power plants in North Carolina alone.The rule would also impact NRGEnergy Inc.'s 15 coal-fired power plants with 13,664 MW of combinedcapacity across several states. DynegyInc. has 8,523 MW of capacity that would be impacted with most ofthat located in Illinois, although its approximately 1,083-MW Brayton Point power plant is in Massachusetts.

Theconcentration of affected coal-fired generation is high along the Rust Belt,with a cluster of power plants of all sizes stringing through Pennsylvania,Ohio, Indiana, Illinois, West Virginia, Kentucky and stretching to Missouri.

Montanahas a relatively small concentration of coal power plants when compared to someof the Rust Belt states, yet the state has the handed out under the CleanPower Plan.

Interms of gas-fired capacity, XcelEnergy Inc. has 6,140 MW of generation that would be impacted bythe rule, including efficient combined-cycle units. Duke has 9,930 MW ofgas-fired capacity primarily in Florida and North Carolina.

Theimpacted gas-fired capacity is concentrated in California, a state with justone small 33-MW coal-fired power plant, the multi-owned facility inKern, Calif. More impacted gas-fired generation is clustered in the New Englandregion, stretching towards Virginia. The Southeast also has heavyconcentrations of natural gas-fired generation that would become subject to theClean Power Plan if the rule is upheld.