In the Fall of 2018, the Environmental Protection Agency (EPA) had released its proposed rule to replace the 2015 Clean Power Plan which included new regulation of carbon dioxide (CO2) emissions from coal-based power plants. The proposed new regulation, known as the “Affordable Clean Energy (ACE) Rule”, was released on June 19, 2019, and replaces the Clean Power Plan.
The final ACE Rule applies only to coal-based steam generating units. It recognizes that the Clean Air Act authorizes CO2 reduction at existing plants through the application of heat rate improvement (HRI) measures and operational changes at the source itself (inside the fence). It also directs states to develop standards of performance for individual power plants by applying a prescribed list of technologies that constitute the “Best System of Emission Reduction” (BSER). ACE also includes a provision giving states three years to develop and submit a State Implementation Plan (SIP) to the EPA containing standards of performance for each regulated facility in the state. Upon submitting its SIP, the EPA has six months to determine whether the SIP is “complete” and if so, then has 12 months to approve/disapprove the SIP (total of up to 18 months for final action on a SIP). If a state’s SIP is still not acceptable by the EPA, the EPA has two years to develop a Federal Implementation Plan to which that state must comply.
What does this mean to Northwest Iowa Power Cooperative (NIPCO) and its member cooperatives?
NIPCO, a wholesale electric generation and transmission service provider to electric cooperatives in western Iowa, purchases nearly eighty percent of its power supply from Basin Electric Power Cooperative, headquartered in Bismarck, North Dakota. The proposed ACE rule provides Basin Electric with an achievable plan consistent with EPA’s authority under the Clean Air Act.
This is good news as ACE recognizes the investments made by Basin Electric in its coal-based facilities to improve efficiency and reduce CO2 emissions. In finalizing the rule, EPA recognized and replied to Basin Electric concerns regarding the challenges associated with complying with a rate-based standard of performance, given the variable operation of power plants and the correlation with the emissions rate.
The proposed rule is also consistent with federal law by focusing on actions that are achievable “inside the fence” (meaning: focusing on plant competences, from within its own operations, rather than outside influences which are not directly impacting plant operations) of a regulated unit.
According to Basin Electric, the ACE Ruling allows states to apply the BSER to regulated facilities, develop a standard of performance, and develop monitoring and compliance measures. Facilities operated by Basin Electric have already installed most, if not all, of the HRI measures that the EPA has identified as the BSER. Basin Electric will be working with the North Dakota and Wyoming Departments of Environmental Quality to further evaluate the BSER and assist with developing and implementing a standard of performance for each facility.
While there will be challenges with developing standards of performance and associated monitoring and compliance measures among Basin Electric’s coal-based fleet, Basin Electric remains optimistic that states will use the flexibility provided by EPA to implement this rule without significant economic impact to Basin Electric and its members.