New Clean Air Rules Come with Many Challenges for States, Industry

The U.S. electricity sector is undergoing quite a bit of transition, partly because of regulations like section 111(d) of the Clean Air Act.

But those aren’t the only reasons, Jennifer Macedonia, senior adviser with the Bipartisan Policy Institute, said during Monday’s session, “A Closer Look at 111d.”

“We’re also dealing with an aging fleet of generators, which at some point … will need to retired,” she said. “So many of our fleet is past 30 and 40 year mark.”

The lower cost of natural gas from the shale fields is making it hard for coal plants to compete, and those costs, which are predicted to remain stable for some time, are influencing the economics of what power companies will do when it’s time to build new power plants, she said.

Renewable power and energy efficiencies also are impacting those decisions, said Macedonia and Lopa Parikh, director of federal regulatory affairs for the Edison Electric Institute, an industry association.

But any new plant will be affected by what’s known as 111d, the rules for which were released in June and are in public comment period through Sept. 16.

The Environmental Protection Agency expects to make changes in its guidelines based on the comment period, Macedonia said, and then states will be required to take the next step to develop their plans.

States have a lot of flexibility, which is one thing state regulators requested, said Colette Honorable, president of the National Association of Regulatory Utility Commissioners, known as NARUC, and chair of the Arkansas Public Service Commission.

Arkansas is convening workshops to ensure all interested parties have information about the impact of the proposed rules. The next workshop will feature representatives from the U.S. Chamber of Commerce and the Sierra Club.

The Public Service Commission will take that input and develop comments to submit to the EPA on behalf of the state, Honorable said.

Parikh said providers primarily are concerned with affordability and reliability, particularly during the transition period as the industry moves from coal to natural gas and renewable energies.

“Our concern is about maintaining diversity because we think it promotes reliability,” she said.

She said state officials should remember several challenges as they move forward with developing the plans based on 111d, among them—the timeframe for building the infrastructure, how the systems will operate and the state’s traditional fuel mix.