POWER June 2015 - 66

ELECTRIC POWER
Executives Say Power Sector
Faces Fundamental Changes
Four industry executives sometimes agreed, and sometimes disagreed, about
the great unknowns concerning the Environmental Protection Agency's
Clean Power Plan during the Executive Roundtable at this year's ELECTRIC
POWER Conference & Exhibition.
Kennedy Maize
W
hat problems will the Obama administration's
upcoming Clean
Power Plan (CPP) deliver to the
executives who manage the companies that
make the power? That topic quickly arose at
the Executive Roundtable during the ELECTRIC
POWER Conference & Exhibition
(sponsored by POWER) in Rosemont, Ill.,
in April-coincidentally on Earth Day. Predictably,
the perspective varies according
to the economic interests of the companies
(Figure 1).
For Robert Flexon, president and CEO of
Dynegy, a large non-utility generator that operates
in multiple states, the plan-forced by
the underlying Clean Air Act to operate on a
state-by-state basis-will create unintended
consequences that lead to " carbon leakage. "
Because Congress couldn't agree on a way
to reach common ground on carbon controls,
the Environmental Protection Agency (EPA)
took the only tool it had, the air act, to formulate
its program.
That leads to state-by-state reduction
targets that create strange outcomes, Flexon
said. For example, Illinois and Indiana
have about the same generating profile
and the same reduction targets. But the
less-efficient plants in terms of carbon
emissions are in Indiana. So Illinois will
have to take more stringent measures to
reduce CO2
emissions. " The less-efficient
plants in Indiana will survive at the cost of
the more efficient units in Illinois. " That
leads to fewer carbon reductions than are
achievable. State-by-state, he said, is " not
the way to go. " He also predicted that the
plan will be " heavily litigated, " which will
make meeting the timelines in the regulations
even more difficult.
Timing Trials
Under the draft of the EPA plan (the final
rule is expected this summer), the EPA
establishes an interim reduction mandate
for 2020 and a second reduction target for
2030. This approach, said B. Keith Trent,
66
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POWER | June 2015
executive vice president of grid solutions
and president of Duke Energy's Midwest
and Florida regions, will impose reliability
threats and unnecessary costs to customers.
In North Carolina and Florida, where
Duke has its largest state-regulated operations,
the company will have to hit 75% of
its emissions reductions for 2030 by 2020.
" It doesn't work, " said Trent (Figure 2).
He added that by the time the EPA plan
emerges from a certain blizzard of litigation,
it will be " 2018 to 2019. " That leaves
little time for his company to hit its 75% of
2030 target by 2020.
The plan will also create stranded utility
costs, which will flow to customers, said
Trent. Duke has invested considerable capital
in coal plants in recent years to meet new
EPA regulations, such as the Mercury and Air
Toxics Standards (MATS). Under the CPP,
the company likely will have to close some
recently upgraded plants, and customers will
eat the costs.
For Lee Davis, executive vice president
and regional president, east for NRG, an
aggressive non-utility generator that is
concentrating on expanded and enhanced
distributed generation, the interim reduction,
by 2020, " looks like a cliff to us, not
a transition. We've been advocating for
a glide path. " That's a point that NRG's
Steve Corneli raised the day before at the
conference's " Environmental Mega Session-Rebalancing
the Electric System for
Environmental Consideration. "
A phase-in, said Davis, would allow
for systems to become more resilient
and flexible. The EPA plan, as it appears
from the draft, is " overly reliant on generation
that's completely inflexible. " By
that, he was referencing wind and solar,
which cannot work within the conventional
model of economic dispatch, with the
output from the lowest-cost plants being
dispatched first.
Joseph Dominguez, Exelon Generation's
executive vice president for government and
regulatory affairs and public policy, noted a
particular problem for Exelon, the nation's
largest nuclear generator. The EPA draft, he
1. Agreements and disagreements. Participants in the Executive Roundtable were
(left to right): Joseph Dominguez, executive vice president government/regulatory affairs and
public policy, Exelon Generation LLC; Lee Davis, executive vice president and regional president,
east, NRG; B. Keith Trent, executive VP of grid solutions and president of Duke Energy's
Midwest and Florida regions; Robert C. Flexon, president and CEO, Dynegy Inc.; and John
Shelk, president and CEO, Electric Power Supply Association. Source: POWER/Gail Reitenbach

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POWER June 2015

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