Texas Committee Hears of ‘Severe Threat’ From EPA Carbon Plan

A committee of Texas lawmakers gathered yesterday to hear what’s becoming a familiar refrain in the state — that U.S. EPA’s plan to slash carbon dioxide emissions at existing power plants is a costly and expansive threat.

“This rule’s not about technology solving environmental problems inside the fence,” said Mike Nasi, general counsel for Balanced Energy for Texas, a coalition whose website touts the role of oil, natural gas and coal. “It’s about the federal government telling us how to run our electric market.”

The comments came during the first day of a hearing on EPA’s carbon plan before the state House of Representatives’ Environmental Regulation Committee, with more testimony expected today. Nasi described an outlook for dramatically higher electric prices and what he called disproportionate treatment of Texas.

Earlier in the day, Brian Lloyd, executive director of the Public Utility Commission of Texas (PUC), issued his own warning. He said average retail prices in Texas have dropped since 2005, bucking an increase in the United States. The EPA discussion is “disheartening” for many people, he said, because Texas has tried to be attractive and have low power costs.

“And now all that is, I think, under severe threat,” Lloyd said.

EPA’s proposed Clean Power Plan seeks a 30 percent reduction in carbon dioxide emissions from U.S. power plants by 2030 compared with 2005 levels. Targets vary by state, and the goal for Texas is about a 39 percent decline compared with 2012 in pounds per megawatt-hour.

The EPA plan was announced in June, with a comment period deadline extended to Dec. 1. The agency is seeking progress toward reductions by 2020. EPA’s proposed building blocks for states include making coal-fired plants more efficient, boosting the use of efficient natural gas-fueled plants, producing electricity from low- or zero-emission facilities, and energy efficiency.

Lloyd said some building blocks work against each other, and he said more use of gas-fueled plants and a drop in using coal-fired plants would have a big effect on Texas. That includes a possible boost to 70 percent of energy coming from gas plants from 43 percent, he said. Lloyd also noted a potential 20 percent renewable energy standard and large use of energy efficiency.

Yesterday’s hearing followed a meeting last month of Texas regulators that also focused on EPA’s proposal to reduce greenhouse gas emissions from existing generating plants (EnergyWire, Aug. 18). That workshop was organized by the PUC, which invited members of the Texas Commission on Environmental Quality (TCEQ) and the Railroad Commission of Texas.

Commissioner Toby Baker of TCEQ said the Clean Air Act was designed to push states, but he took on assumptions related to reliability, cost, enforceability and timing of the carbon proposal.

“They’re highly questionable, and they’re extremely challenging,” Baker said yesterday. He said regulatory oversight, given various aspects of the proposal, also would need to be sorted out.

As with the earlier Texas regulatory meeting, the possibility of challenging the U.S. government loomed over yesterday’s hearing at times.

“What if we just said no?” Rep. Jason Villalba (R) asked. “You know, there is precedent in Texas for telling the federal government that we are not going to be under the boot of the federal government’s authority.”

Staff members from TCEQ indicated that EPA’s authority came from the Clean Air Act, although Texas could challenge a plan if the agency created one for the state. Villalba then brought up the idea of “efficient breach,” or not complying after examining the possible consequences.

Environmental groups see benefits

Sam Newell of the Brattle Group, a consulting firm, said added pressures could make it harder for Texas to meet reliability standards, but perhaps not as hard as some people suggest. He said Texas might be better prepared to deal with reliability issues than many other places because of its setup that provides a signal for prices to be high during times of scarcity.

Some backers of the carbon plan held a conference call with reporters before yesterday’s hearing to tout potential health and climate benefits, as well as flexibility for states. Representatives from the Sierra Club, Public Citizen and Environment Texas said the state is positioned to meet the reduction target set for it by EPA.

“We don’t think that’s going to be that difficult to meet, and it’s actually going to be of great benefit to Texas,” said Cyrus Reed, conservation director for the Lone Star chapter of the Sierra Club.

Tom “Smitty” Smith, director of Public Citizen’s Texas office, said legislators may not need to do much to make a state plan work, but they could amend some language and come up with a way to trade credits. While Texas likely will become involved in litigation, Smith said the record on carbon litigation has favored EPA.

“Unless there’s some new wrinkle that we’re not seeing, it’s in all likelihood that we’re going to be having to complying with it,” Smith said, “and we might as well get ahead of it and … not violate the first rule of holes, which is quit digging.”

But the PUC’s Lloyd said EPA hasn’t provided the sort of flexibility suggested by supporters. He noted that Texas has multiple power grids, not just the region managed by the Electric Reliability Council of Texas, or ERCOT.

If Texas were to try to meet the EPA proposal, it would need to look at the building blocks set out by the agency, he said. An energy efficiency piece alone could rise to cost more than $1 billion a year, according to Lloyd.

“It’s faux flexibility,” he said.

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