Clean Power Plan’s ‘Federal Plan’ and Model Trading Rules Fail to Address Electric Co-ops’ Concerns

(ARLINGTON, VA) — The National Rural Electric Cooperative Association (NRECA) today participated in a public hearing on proposals for implementing the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan (CPP). John Novak, executive director, environment, testified on the agency’s Federal Plan and Model Trading Rules, challenging EPA’s assertions that they represent a “readily available path forward” to CPP implementation.

“The proposed Federal Plan and Model Trading Rules fail to address the concerns that NRECA and our members raised in our comments, in our previous statements, and in meetings with EPA and others in the administration,” Novak said. “The bottom line is that electric co-ops and their consumer-owners will see higher electricity rates under the Clean Power Plan, whether they participate in a state implementation plan or the proposed Federal Plan.”

Novak pointed out that electric co-ops are heavily reliant on coal generation, because they built coal-fired power plants at a time when the federal government encouraged the use of coal to provide reliable, affordable electricity. The CPP will lead to the shutdown of co-op-owned power plants with significant remaining useful lives, and into which co-ops have invested billions of dollars on emission controls. Many co-ops have outstanding loans that were necessary to pay for environmental upgrades, and they need to run these units in order to generate revenue and pay off the loans.

He also took issue with EPA’s assertion that the CPP’s emissions trading provisions would provide sufficient flexibility to avoid the premature shutdown of co-op-owned power plants. Because of their small size and reliance on coal, many co-ops would not be able to take advantage of the flexibility in the Federal Plan, such as the option to run lower-emitting natural gas power plants instead of coal.

In closing, Novak urged EPA to reconsider adding a dynamic reliability safety valve to the CPP. NRECA doesn’t believe the market will be able to adequately compensate for an unexpected electricity outage at a large nuclear power plant. This could force some coal power plants to run more, putting them in conflict with their emissions requirements under the CPP.

The National Rural Electric Cooperative Association is the national service organization that represents the nation’s more than 900 private, not-for-profit, consumer-owned electric cooperatives, which provide service to 42 million people in 47 states.

Testimony by NRECA’s John Novak on the CPP Federal Implementation Plan