American Oil and Gas Reporter - September 2015 - 159

of-service markets are likely to recover
compliance costs through rate adjustments.

Assuring Reliability
The final rule has several features that
EPA says reflect its commitment to ensuring that compliance with the rule does
not interfere with the power generation
sector's ability to maintain the reliability
of the nation's electric supply.
According to the agency, the Clean
Power Plan's extended compliance period
and phased-in reduction requirements
provide sufficient time and flexibility for
the planning and investments needed to
maintain system reliability. It says its
basic design allows states to include a
large number of approaches to achieve
required goals that are tailored to each
state's energy resources and policies.
The plan also requires states to demonstrate that they have considered reliability
issues in their final plans. It provides
mechanisms for states to seek plan revisions in case unanticipated or significant
reliability issues arise, the agency says.
The Clean Power Plan also includes
"a reliability safety valve to address situations where, in the wake of an unanticipated event or other extraordinary circumstances, an affected power plant must
provide reliability-critical generation,
notwithstanding CO2 emission constraints
that would otherwise apply," EPA states.
In addition, the agency says it is
working with the Department of Energy
and Federal Energy Regulatory Commission in a coordinated effort to monitor
the rule's implementation to help preserve
continued reliable electric generation and
transmission.
Diverse Reactions
Reactions to the Clean Power Plan
ranged from a statement released by eight
environmental organizations, including
the Natural Resources Defense Council
and the Sierra Club, that referred to the
rule as "a tremendous achievement" and
calling it a "win for our health, a win for
future generations of Americans and a
win for securing a clean energy economy,"
to the Heartland Institute's charge that
"President Obama's (plan) to combat climate change is built on a pack of lies."
The Solar Energy Industries Association
considers the plan "historic" and "critically
needed," and says, "As a nation, it is time
to replace our aging, dirty energy infrastructure with clean, reliable 21st century
energy technologies (such as) solar."
The Industrial Energy Consumers of
America worries that the Clean Power
Plan "is giving foreign manufacturing
companies a competitive advantage over

U.S. manufacturing by increasing our
electricity costs," adding, "Loss of global
competitiveness results in loss of middle
class jobs and investment."
American Energy Alliance President
Thomas Pyle says, "It is important to remember that President Obama's carbon
regulation . . . has no impact on climate
change. EPA's own models show its carbon rule will limit global temperature
rise by a mere 0.018 degrees Celsius by
2100."
EPA estimates the Clean Power Plan
will generate health and climate benefits
worth $34 billion-$54 billion a year in
2030, compared with an implementation
cost of $8.4 billion. The agency also contends energy bills should decline about
$7 a month because of increased energy
efficiency.
James H. Rust, a Heartland Institute
policy adviser and retired professor of
nuclear engineering at Georgia Tech, responds, "If you believe that statement,
you also believed Obamacare would decrease your medical insurance rates."
The American Energy Alliance (AEA)
and the Institute for Energy Research
(IER) also weighed in on the costs of the
Clean Power Plan. AEA cites an analysis
by NERA Economic Consulting that it
says shows annual costs of implementation
will be $41 billion.
IER compares the unit costs of generating electricity from existing facilities
to those of new-builds. Using data from
the U.S. Energy Information Administration and the Federal Energy Regulatory
Commission, IER reports electricity costs
range from $29.60 a megawatt-hour from
existing nuclear power plants to $38.40
and $48.90 an mwh from existing coaland natural gas-fueled plants, respectively.
IER contrasts that with $73.40 an mwh
and $106.80 an mwh to build and produce
electricity from a new gas-fired and wind
facility, respectively.
Heartland Institute Senior Fellow James
Taylor points out the North American
Electric Reliability Corporation calculated
the 2014 proposed Clean Power Plan
would have resulted in retiring more than
134 gigawatts of coal-fired generation.
"So what does EPA do?" Taylor poses.
"It increases the target, ensuring more
power plants shut down earlier, resulting
in an even greater threat of brownouts
and blackouts."
Push Renewables
In another change from the 2014 proposed rule, the final Clean Power Plan
includes a clean energy incentive program,
which EPA says will "reward early investments in certain renewable energy
and demand-side energy efficiency projects

that generate carbon-free electricity or
reduce end-use energy demand during
2020-21."
Interpreting that as an attempt to push
states away from using natural gas, America's Natural Gas Alliance responds, "We
believe the White House is perpetuating
a false choice between renewables and
natural gas."
Commenting in early August that
ANGA still was reviewing the rule, President and Chief Executive Officer Marty
Durbin said, "Initial reports indicate the
White House is ignoring market realities
and discounting the ability of natural gas
to . . . (reduce emissions) more quickly
and reliably, while powering growth and
helping consumers."
Adds American Petroleum Institute
Senior Director of Regulatory and Scientific Affairs Howard J. Feldman, "By
picking winners and losers in the energy
mix, EPA's rules could force consumers
to pay far more money for far fewer environmental benefits. EPA's final rule
imposes unnecessary costs on state and
U.S. consumers while overlooking the
proven, market-driven potential of natural
gas to help reduce emissions."
Americans for Prosperity urges states
"to avoid submitting implementation plans
until the courts have adjudicated the
EPA's dramatic overreach. Officials
should seek ways to protect their states
from these costly, legally dubious regulations, which are being enacted at the
direction of unelected bureaucrats without
input from Congress."
Texas Railroad Commission Chairman
David Porter urged Texas Governor Greg
Abbott to refuse to comply with the Clean
Power Plan, predicting what he called
"the president's unlawful edict" would
harm the state's economy. Porter cited
projections from the National Economic
Research Associates that utility bills in
most states would double because of the
rule.
"This is the culmination of what has
been a long war on fossil fuels and Texas'
lifeblood during the president's tenure,"
Porter says.
Comments submitted by a coalition
that includes the Colorado Oil & Gas
Association and Western Energy Alliance
says the Obama plan establishes a disappointing false choice between natural gas
and renewable energy sources. The group
points out government data show natural
gas has played and will continue to play
a central role in reducing CO2 emissions
quickly and safely and in a cost-effective
manner.
"America's oil and natural gas industry
invested an estimated $165.4 billion in
zero and low emissions technologies from
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American Oil and Gas Reporter - September 2015

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