Final CPP Delays and “Safety Valve” Add Little Comfort for Ohio’s Electric Customers

This week, the Obama administration released its final Clean Power Plan (CPP) rule. The CPP, a massive new regulatory scheme that, for the first time ever, will place strict regulations on carbon emissions from power plants. The final plan sets state-specific reduction goals that when combined, propose a 32 percent reduction in carbon emissions from our nation’s energy sector. Under the final rule, states have a 2018 deadline – not the 2016 deadline that was part of the initial proposed rule – to submit a compliance plan and must begin meeting reduction targets in 2022.

With any document over 1,500 pages long, it will take time to fully review how all the CPP’s changes will impact Ohio. EPA also simultaneously released their proposed Federal Plan for the CPP on Monday. The Federal Plan details how the federal government would implement the rule in states that do not submit a satisfactory state implementation plan.

Here are some initial thoughts on the impact of the Clean Power Plan final rule.

  • Moving back the deadlines for the submission of state plans, start of interim compliance, and the inclusion of a “reliability safety valve” are positive changes by EPA.
    • These changes indicate EPA recognizes the proposed plan would have caused even more dire reliability problems for the electric grid.
  • It appears Ohio’s goals for CO2 emission reductions were ratcheted down from the initial proposal, from 29 percent to 37 percent, while the national integration goals for renewable energy sources are ratcheted up from 22 percent to 28 percent.
  • The final rule still relies on disputed interpretations of the EPA’s authority under the Clean Air Act that will be challenged in the courts, adding more uncertainty to our rapidly changing energy markets.
  • The CPP rules will reduce grid reliability and increase the cost of electricity due to the impractical transition from reliable baseload coal units to combined cycle natural gas.
  • The EPA does not claim the emission reductions and accelerated power plant closings required by the CPP will have any discernable impact on global warming or global greenhouse emissions.

The CPP will have disproportionate consequences for Ohio electric consumers and for the economic competitiveness of Ohio manufacturers, developers, and all energy-reliant business sectors. More analysis and legal challenges will unfold in the coming weeks. The Ohio Chamber will continue working with and on behalf of its members to ensure Ohio businesses are able to invest and grow in light of what will likely be an unpredictable energy market.

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