Update on EPA Activities

MOPCJuly 15-16, 2014

• Current Known Impacts– Retirements

– De-ratings

– Outage Impact Studies

• Proposed Clean Power Plan

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Topics Covered

CURRENT KNOWN IMPACTS

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Impact on Coal in SPP(based on recent survey)

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Comparison with ITP 10 Assumptions

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• SPP bi-annual study process

– Four-year look ahead for reliability issues

– Weekly snapshots through the four years

– Scheduled outages taken into account

• Current studies indicate there will be adequate time to perform generator retrofits necessary to comply with known environmental regulations

– Retrofits are expected to impact generation supply economics more than the ability to reliably serve load

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Outage Impact Study *

* Formerly called “EPA Study”

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67,678

Outage Impact Study Resource Adequacy 20142014 Weekly Outages

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Outage Impact Study Resource Adequacy 20152015 Weekly Outages

67,678

PROPOSED CLEAN POWER PLAN

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• EPA’s proposed performance standards to reduce CO2 emissions from existing fossil fuel-fired generators

• Promulgated under authority of Section 111(d) of the Clean Air Act

• Achieves nationwide 30% reduction of CO2 from 2005 levels by 2030

• Proposes state-specific emission rate-based CO2 goals– Based on EPA’s interpretation and application of Best System of Emission Reduction (BSER)

– Must be met by 2030

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EPA Clean Power Plan Overview

• States goals and flexibility– Interim goals applied 2020-2029 that allows states to choose trajectory

– Offers guidelines and allows states flexibility to develop and submit State Implementation Plans

– States may adopt an equivalent mass-based goal

• States can develop individual plans or collaborate with other states

• If state does not submit a plan or its plan is not approved, EPA will establish a plan for that state

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EPA Clean Power Plan Overview

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Clean Power Plan Milestones

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BSER is Based on Four Building Blocks

*Uses 2012 data for existing units and estimated data for units under construction.

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SPP State Goals by 2030

*Includes Future States with IS Generation in SPP (N. Dakota, S. Dakota, Montana, and Wyoming)

Fossil Unit CO2 Emission Rate Goals and Block Application (lbs/MWh)

SPP State Average 2012 Rate = 1,699

SPP State Average 2030 Rate = 1,045

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SPP State % Emission Reduction Goals

*Includes Future States with IS Generation in SPP (N. Dakota, S. Dakota, Montana, and Wyoming)

Total CO2 Emission Reduction Goals (%)

Average of SPP States = 38.5%

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EPA Projected 2016-2020 EGU Retirements(For SPP and Select Neighboring States)

*Excludes committed retirements prior to 2016**AEP provided data extracted from EPA IPM data

• Arkansas– ADEQ has already had two stakeholder meetings, June 25th & May 28th

– Next stakeholder meeting August 28th

– SPP Staff met with ADEQ to provide an SPP overview

• Missouri– Stakeholder meeting scheduled by MoPSC on August 18th

• Nebraska– SPP Staff meeting with NDEQ and Nebraska utilities on July 30th

• Oklahoma– Meeting being scheduled in August with stakeholders

• Texas– Public workshop scheduled by PUCT on August 15th

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SPP State Efforts Underway

Help educate and work with states

Perform impact analyses– Inform stakeholder responses that are due October 16

– Inform current planning efforts

– Assist state and member decision making

Facilitate coordinated SPP response to proposed Clean Power Plan

Evaluate and facilitate regional approach

Coordinate with neighbors

Other ways?

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How Can SPP Assist?

• Perform both reliability and economic analyses– Use 2024 ITPNT and ITP10 Future 2 models as base case

– Develop two scenarios

– Identify incremental reliability problems and increased APC

• Perform gas price sensitivity in economic analysis

• Perform load scaling sensitivity in reliability analysis

• Report results by October 1

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SPP’s Proposed Impact Analysis Framework

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Proposed Impact Analysis Scenarios

Parameter Scenario 1 Scenario 2

Coal 50% retirement 20% retirement

NGCCs* Increase capacity factor to 70%

Increase capacity factor to 50%

Wind At least 50% capacity increase, assume additional state RPS

At least 50% capacity increase

Energy Efficiency 1% of load 3% of load

Demand Response

None None

Carbon Tax None $30/ton

*Will attempt to use existing capacity to replace coal up to existing capacity margin requirements