Philadelphia’s Clean Energy Future is Now!

How does Pennsylvania plan to comply with the Clean Power Plan?

PAPUC Commissioner Andrew G. PlaceNovember 13, 2015

Emissions Rationale for the Plan

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Public Health Rationale for the Plan

• Increase in heat stroke and heat-related deaths • Extreme heat events are the leading weather-related cause of death in

the U.S. • Worsening ground-level ozone and, in some cases, particle pollution • Increasing intensity of extreme events, like hurricanes, extreme

precipitation and flooding • Increase in the range of insects that spread diseases such as Lyme

disease and West Nile virus

Source: U.S. EPA (2015) 3

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Cost/Benefit and Reliability Analysis

• EPA - Net (annual, US) climate and health benefits: $25 billion to $45 billion in 2030.

• March, 2015 Analysis Group Study – Electric System Reliability – predicts no major PJM reliability issues with the initial CPP proposal.

• March, 2015 PJM Study - At risk generation levels: 6.2GW to 32GW of generation projected to be at risk: high levels of EE and renewable energy decrease the amount of at-risk generation.

• July, 2015 PJM Study – Transmission system reliability study: Significant transmission build-out may be necessary under a 32 GW retirement scenario, particularly if new generation is not sited near retired generation, as may be the case for new wind resources. Delays in transmission build may limit wind development at levels assumed in the CPP rule.

• PJM is currently developing revised models to update their analysis to reflect the the final rulemaking. Model results should be available in the April – July 2016 timeframe.

Impacts (with large caveats) on retail prices?

EIA analysis of the initial rule:“Retail electricity prices increase most in the early 2020s, in response to initial compliance measures. Increased investment in new generating capacity as well as increased use of natural gas for generation lead to electricity prices that are 3% to 7% higher on average from 2020-25 in the Clean Power Plan cases, versus the respective baseline cases (Figure 14)…. By 2040, total electricity expenditures in the CPP case are slightly below those in the AEO2015 Reference case, as decreases in demand more than offset the price increases. ”

5Source: U.S. Energy Information Administration (May 2015)

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What we know (EPA)…

• 32% Reduction in US electricity related carbon emissions relative to 2005.

• 3 interim compliance periods [2022-2024, 2025-2027, 2028-2029], and final period [2030] – Glide path to goal achievement.

• Final or initial submittal must be filed by September 6, 2016. If extensions are granted, a final plan must be submitted by September 6, 2018. If no plan is filed a federal compliance plan will be imposed.

• Reliability Safety Valve built in to ensure electricity reliability is not threatened.

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Derivation of Goals – 3 building blocks• BB1 – Improved efficiency in coal fired coal plants

[4.3% reduction in eastern interconnect]• BB2 – Shift of generation from coal plants to

Combined-Cycle Natural Gas (CCNG) units.• BB3 – New renewable energy generation• EPA has removed Energy Efficiency (EE) as a

building block, but confirmed its relevance as a valid compliance strategy

What we know (EPA)… (cont.)

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What we know (PA and DEP)…

• Much of the modeling to date was done on the proposed rule.

• DEP’s goal is to submit a final plan by September 2016.• PA Specific Requirements/Options for Affected Units:

Current 2022-2024 2025-2027 2028-2029 2030

Rate (#CO2/MWh) 1,627 1,359 1,232 1,146 1,095

Mass (Mtons CO2) 117 106.1 97.2 92.4 89.8

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DEP’s Considerations (compliance options)

• Mass based vs. rate based?– Choice of conversion (rate-to-mass) metrics (apples to apples) matters

• Federally enforceable “emission standards”, or (2) non-federally enforceable “state measures“?

• Trading: State vs. regional vs. national [trade ready]?• Include or exclude new fossil-fueled (NGCC) units?• How to allocate emission allowances?• Clean Energy Incentive Program (CEIP) participation?• Non-building block options*: EE, existing renewable power unit uprates,

distribution and transmission line-loss improvements, CHP, efficiency improvements for non-coal units, distributed generation, new or uprated nuclear plants, qualified biomass, qualified Waste Heat Power and carbon capture and utilization or sequestration.

*Actions taken by affected sources that do not result in emission reductions from the affected sources –- for example, offsets (e.g., the planting of forests to sequester CO2) –- do not qualify for inclusion in the BSER.

PUC focal points

• Working with other concerned parties • Focused on:

– Reliability & Least Cost Compliance• Prioritizing PA’s indigenous resources• Maintain a diverse fuel mix• Protect PA’s position as a net energy exporter

– Energy Efficiency and Conservation• For example Act 129

– Renewables• Valuable tool for reliability, diversity, generation and job creation

– Other options to be considered:• Biomass • Combined Heat and Power• Grid improvements (reduction in line losses and congestion)

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Impact Analysis – Environmental Justice

• DEP focal points include:– Identifying communities:• adversely impacted by climate change.• likely to experience economic impacts due to the rule.

– How to:• reach out to vulnerable populations? • ensure communities are not disproportionately

impacted by the state plan?

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Ongoing Mitigation: PAPUC Assistance Programs

• Customer Assistance Programs (CAPs) – income based reductions in the cost of electricity for qualifying customers.

• Low Income Usage Reduction Programs (LIURP) – Energy Efficiency programs targeted at high usage low income customers.

• Customer Assistance and Referral Evaluation Services (CARES) – provides referral services for payment-troubled customers experiencing a temporary hardship.

• Hardship Fund (Dollar Energy Fund) – provides grants to those with overdue balances and an inability to pay energy bills.

• Phase III Low Income Act 127 target - The phase III implementation order required each EDC to obtain a minimum of 5.5% of their total consumption reduction target from the low-income sector.

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DEP Public Input Sessions

Pre-plan comments– Outreach - 14 Listening Sessions held throughout

the state.– Written comments due yesterday (November 12,

2015).Post draft-plan comments– Draft plan to be posted in Spring 2016.– Comments to draft plan will be solicited.

Goal - Final Plan submission September 2016

Conclusions

• State Implementation plan:– Ongoing stakeholder engagement required

• Collaborative work in progress highlighting – Flexibility– Cost efficiency– Reliability

– Environmental justice is fundamental– Demand side EE is a significant driver of compliance cost

reductions and mitigating price impacts– Nat Gas drives compliance early with RE becoming more

significant after 2020– Coal and Nat Gas remain significant contributors to the generation

mix throughout the compliance period14

Thank you

Questions?

PAPUC Commissioner Andrew G. Place(717) 783-1197aplace@pa.gov