EPA's Approach on Carbon Limits to Spark Court Challenges

The expected legal battle over the Obama administration's coming limits on carbon emissions from existing power plants could provide a rarity for environmental litigation: a case for which there is scant court precedent. The Environmental Protection Agency is turning to a little-used provision of the Clean Air Act for its new rules, because carbon dioxide isn't regulated under major Clean Air Act programs that address air pollutants. The EPA says it has only used the section, called 111(d), to regulate five sources of pollutants since the provision was enacted in 1970—and none on the scale of CO2, a major greenhouse gas. Enlarge Image Because the provision has been invoked so rarely, courts have had little opportunity to weigh in on it, creating the unusual circumstance in which potential challengers to the carbon rules would be litigating largely on a blank slate against the EPA. The Clean Air Act provision gives the agency authority to regulate pollutants emitted by facilities already in operation, but the expected lawsuits from states and industry could test how far a president can go in using the long-standing air-pollution law to try to address climate change. The coming EPA regulation "is in many ways unprecedented, so it will attract a challenge to its core," said Jody Freeman, a Harvard University law professor and former adviser to President Barack Obama on energy and climate issues. The administration's approach is expected to generate stiff legal pushback from industry groups and states such as West Virginia, Oklahoma, North Dakota, Alaska and Texas, according to lawyers familiar with the matter. Potential challengers face hurdles in court. Under long-standing legal principles, courts give deference to administrative agencies like the EPA as long as they don't regulate in an arbitrary and capricious manner. The looming fights also come amid a legal winning streak for the EPA, in which courts have upheld an array of agency actions in recent years. The Supreme Court last month revived agency regulations that curbed power-plant emissions blowing across state lines, reversing a lower-court ruling that went against the agency. And a key appeals court has ruled for the EPA on several occasions in recent months, in cases brought both by industry groups and by environmentalists. Among the decisions, it upheld EPA regulations of mercury emissions from power plants. The same appeals court previously upheld the EPA's 2009 conclusion that CO2 and other greenhouse gases pose a danger to public health, and it upheld subsequent rules on automobile emissions. A ruling from the Supreme Court is expected next month on one issue related to the EPA's imposition of greenhouse-gas permitting requirements for some facilities. The CO2 rules expected to be announced Monday will set emissions benchmarks and give the states flexibility in meeting them—a partnership mandated by the Clean Air Act. The administration plans to allow states to use cap-and-trade systems, renewable energy and other measures to meet aggressive goals for reducing power plants' carbon emissions. An EPA spokesman declined to comment on the legal underpinnings of the coming regulations, but an informational video posted on the agency's website has top officials saying Congress wrote Section 111(d) broadly, with the intention of giving the EPA leeway to address air-pollution problems not covered by other Clean Air Act programs. The section "gives us room to be creative, innovative and flexible as we think about how to design a cost-effective program to reduce carbon pollution from existing power plants," said Janet McCabe, an acting EPA assistant administrator, in the video. Legal objections from industry are likely to center on the EPA's expected interpretation that it can set pollution standards across fleets of power plants, instead of directing individual plants to meet the standard by installing pollution technology or taking other steps at each facility to cut emissions, said Jeff Holmstead, an attorney who represents coal-industry interests at Bracewell & Giuliani LLP. Mr. Holmstead, a former EPA assistant administrator under President George W. Bush, said that because there is so little precedent, the EPA is going to be "as creative as possible," but he noted that it "creates more openings" for industry and states to challenge the agency in court. Washington environmental lawyer Sean Donahue said the lack of court precedent could cut in the EPA's favor: "There's more room to make legal arguments because the courts haven't specified what the statute means and doesn't mean, but it also leaves more room for the agency's judgment." While the specific bounds of the EPA's authority to regulate power plants' carbon emissions haven't been tested in court, a 2011 Supreme Court opinion said the agency had the power to take action to curb emissions. That came in a pro-industry ruling barring a group of states from proceeding with a public-nuisance lawsuit seeking abatement of power-plant emissions. Next week's EPA rules come as the agency is separately proposing greenhouse-gas regulations for future power plants that are more stringent. Those rules are also likely to be challenged in court, and that litigation could affect the agency's regulations for existing plants. The court challenges could for last years, potentially beyond Mr. Obama's second term.

In Colorado, clean energy battle is far from over

Green energy proponents scored a big win recently when a federal judge dismissed a challenge to Colorado's renewable energy standard. However, the fight over clean power generation requirements is far from over. This case is one of many attacks on renewable energy mandates playing out around the country. And even though the Washington, D.C., law firm leading the charge against Colorado's law lost this round, it has vowed to appeal. Coloradans, who created the first version of the state's renewable energy standard via ballot initiative in 2004, should be prepared for a long battle if they want to continue to require utilities to look to renewable sources of power. In all, 30 states have initiated renewable energy standards. Efforts to weaken those standards — whether by legislation or court challenges — have taken place in 22 states during the last year, according to an analysis by Greentech Media, an independent publication focused on the green technology market. In Colorado, for instance, the lawsuit was brought by the Energy and Environment Legal Institute, which used to be called the American Tradition Institute. The plaintiffs, who include a Morrison man, contended the Colorado renewable energy standard violates the U.S. Constitution's commerce clause. So, how does the commerce clause come into play? First, it's helpful to understand Colorado's standard. Investor-owned utilities, such as Xcel, must get 30 percent of the power they sell in the state from renewables by 2020. Large cooperative electric associations must get 20 percent by the same deadline. The plaintiffs argued that energy transmission and purchase is fluid, crossing state lines. In requiring renewables, the law burdens interstate commerce by restricting marketplace access to those generating non-renewable energy. U.S. District Judge William J. Martinez disagreed, saying the quota didn't force out-of-state energy generators to do business in a particular way. The plaintiffs wasted no time in saying they would appeal, hoping to ultimately take the matter to the U.S. Supreme Court. They contend an opposite decision out of Minnesota on renewables makes a high court review probable. We hope they are unsuccessful. Colorado's renewable standard has been a success, prompting energy diversification and job growth. It would be a shame if this home-grown standard were dismantled by outside interests with different priorities. Read more: In Colorado, clean energy battle is far from over - The Denver Post http://www.denverpost.com/editorials/ci_25777671/colorado-clean-energy-battle-is-far-from-over#ixzz32SY9uHBw Read The Denver Post's Terms of Use of its content: http://www.denverpost.com/termsofuse Follow us: @Denverpost on Twitter | Denverpost on Facebook

As Coal Plants Shut Down, Electricity Prices Go Up

Electricity prices are probably on their way up across much of the United States as coal-fired plants, the dominant source of cheap power, shutdown in response to environmental regulations and economic forces, according to the Associated Press. New and tighter pollution rules and tough competition from cleaner sources such as natural gas, wind and solar will lead to the closings of dozens of coal-burning plants across 20 states over the next three years, and many of those that stay open will need expensive retrofits, the AP reported. The Obama administration, state governments and industry are struggling to balance this push for a cleaner environment with the need to keep the grid reliable and prevent prices from rocketing too much higher, according to the AP. Coal is the workhorse of the U.S. power system and is used to produce 40 percent of the nation's electricity, more than any other fuel. Because it is cheap and abundant and can be stored on power plant grounds, it helps keep prices stable and power flowing even when demand spikes, the AP reported. Natural gas, which accounts for 26 percent of the nation's electricity, has dropped in price and become more plentiful because of the fracking boom, but its price is on the rise again, and it is still generally more expensive to produce electricity with gas than with coal, according to the AP. Burning coal releases toxic chemicals, soot and smog-forming chemicals, as well as twice the amount of carbon dioxide that natural gas produces, the AP reported. The Supreme Court last month gave an important approval to one Environmental Protection Agency clean-air rule which cleared the way for a new rule expected to be announced by President Barack Obama early next month. This rule, the first to govern emissions of carbon dioxide from existing power plants, could accelerate the move away from coal, according to the AP. Already, the current rules are expected to force power companies to shut down 68 coal plants across 20 states between 2014 and 2017, according to Bentek Energy, a market analysis firm, the AP reported.

With record profits, Xcel still plans to seek rate increase for Colorado Ratepayers

Citizens question the validity of the utility’s six back-to-back rate increases since 2003. A recent report from Xcel Energy detailing earnings on electric energy in Colorado shows the utility exceed the maximum profit set by the Public Utilities Commission (PUC) by more than 11 percent. Despite excess earnings for the company’s Colorado subsidiary, known as the Public Service Company of Colorado (PSCo), a May 1 statement from Xcel says the utility plans to file for future electric rate increases in the state in 2015 and beyond. Documentation compiled by local Xcel watchdog agency Empower Our Future shows that Xcel has asked for, and been granted, six back-to-back rate increases since 2003. With record profits in 2013 and the company’s plan to seek a seventh increase in 2015, some citizens are raising questions about the validity of the utility’s requests. “I think the overall allocation of profits for utilities probably needs to be reviewed — are we setting up incentives correctly so that we get the behavior we want out of the regulated monopoly that provides us with power?” says Boulder City Council member Sam Weaver, who acted as the main author of the report from Empower our Future prior to his election to Council last year. Weaver says he used federal 10-K financial filings and public reports from Xcel to compare the utility’s sales and generating capacity to their pre-tax profits from 2003 to 2012. “When you look through the [U.S. Securities and Exchange Commission’s] 10-K forms where [Xcel/PSCo] file their peak capacity [in megawatts] and they files sales in terms of kilowatt hours, it’s pretty straightforward,” says Weaver. “Demand is not growing. Even though they are not providing us with additional sources of electricity or additional capacity, Xcel is getting huge increases in profits.” According to the Empower our Future report, the Colorado division’s pre-tax profits have grown from $316 million to $691 million between 2003 and 2012. Weaver says the company filed more than 700 million in pre-tax profits in 2013. In a May 1 press release, Xcel acknowledged that as a result of their last rate increase — a first-time, threeyear rate plan that set up tiered increases from 2012 to the end of 2014 — the company has asked the PUC for permission to credit customers across the state with $45.7 million. So beginning Aug. 1, residential customers in Colorado would see a $1.17 credit per month while small business owners will see a $2.33 credit each month. The three-year agreement raised rates by a total of $114 million. “At the time that this three-year plan was approved, it was approved as part of a settlement agreement that was reached by pretty much every party in the case: Xcel, PUC staff, the [Office of ] Consumer Council, a number of medium and large electric consumer groups and trade groups, and all of them agreed this was a fair resolution to the case and provided fair rates to the company and rate payer,” says PUC spokesman Terry Bote. Bote says the commission created the profit-sharing mechanism as a protection, for customers when the utility exceeds their target profit. When asked how he would respond to criticism of the record profits stemming from the multi-year agreement, Mark Stutz, a spokesperson for Xcel/ PSCo, says that “it’s difficult to predict some aspects of our business in terms of weather, in terms of what your expenses will be.” Stutz reiterates Bote’s statement that the authorized profits from the multi-year settlement were found to be “prudent” by all parties involved, and the profit-sharing mechanism had not been so well defined in previous settlements. Regarding the utility’s plan to file for future rate increases, Stutz says it would be the company’s preference to have another multi-year plan, “because we think they’re good for the customer and good for the utility.” While Colorado’s Consumer Council — an advocate for customers of electric, gas and telecommunications businesses — agreed to the multi-year rate increase plan, director Cindy Schonhaut says it’s not in the public’s best interest. “We don’t like multi-year plans in this office,” says Schonhaut. “We think [multi-year plans] allow for this opportunity to overearn and later keep some of [the excess profits] and then give refunds, which is not in the longterm consumer interest. [The longterm consumer interest] is to pay the right rate at the time they are billed.” Weaver says that the system that governs the profit-making of the utility seems “a little broken” to him. “And it’s really not simply Xcel’s fault. It’s a matter of [how] Xcel, PUC, and the state legislature has set up a series of incentives that allows Xcel to make increasing profits as it makes additional investments in generation faculties,” says Weaver. “Xcel has every incentive to build more whether or not additional generation is needed.” The last coal-fired power plant built in Colorado, the Comanche 3 plant in Pueblo, was heavily criticized by environmental groups who questioned the facility’s impact on emissions and surrounding wilderness. “The tragic part of all of this is that Xcel’s back-to-back rate increases during the worst economic crisis in a century have taken hundreds of millions of dollars from their ratepayers, including businesses both large and small as well as fixed and low-income ratepayers, to pay for a billion-dollar coal plant that never should have been built — a billion dollar toxic and polluting mistake that is rapidly becoming a stranded asset,” longtime Xcel watchdog Leslie Glustrom said in an email to the Boulder Weekly. Xcel says that future rate increases in Colorado will go toward completion of infrastructure investments, “including the estimated $1 billion investment in the Colorado Clean Air, Clean Jobs Act,” which aims to reduce carbon dioxide emissions by about 28 percent. Property tax expenses and “other cost changes” will also be covered by rate increases, according to the utility. “If the legislature was doing to taxes what the PUC has been doing to electric utility rates, all hell would break loose,” Glustrom added.

Xcel, solar industry groups agree on Colorado incentive plan; net metering still at issue

DENVER — Xcel Energy Inc. and two solar industry groups have made a joint proposal to Colorado utility regulators on incentives that encourage customers to put panels on their roofs, they said Tuesday. In announcing their agreement a day before the Colorado Public Utilities Commission opens hearing on Xcel's renewable-energy policy plan, they made clear the contentious issue of net metering remains unresolved. Xcel, the Solar Industries Association and the Colorado Solar Energy Industries Association called in their agreement for the commission to approve 3 cents per kilowatt-hour of Solar Rewards for customer-owned installations of up to 25 kilowatts, and 1 cent per kilowatt-hour for small installations owned by parties other than the homeowner, keeping the program active pending approval of the overall renewable energy plan. They also proposed restarting a medium program for solar arrays of between 25 and 500 kilowatts that had been closed since October 2013, when that program's capacity was reached. For the medium program, incentives were proposed of 6 cents per kilowatt-hour for the first 6 megawatts and 5 cents for the final megawatt. Terry Bote, spokesman for the utility commission, said the commission will set a shortened notice period of 10 days on the agreement at a meeting Wednesday. If the commission decides to shorten the notice period and hears no opposition to the proposed settlement, commissioners could consider the merits of the settlement at a weekly meeting later this month, Bote said. The agreement will ensure the market is not disrupted, good news for solar companies like California-based Sunrun, said Susan Glick, Sunrun's senior manager for public policy. But she made a clear distinction between the Solar Rewards incentives and net metering. "Net metering is not an incentive. It is a billing mechanism," she said. Xcel spokesman Mark Stutz told The Associated Press the Solar Rewards agreement "does show that there are issues that we can agree on." But Stutz said Xcel still had concerns about net metering, which allows homeowners with rooftop solar arrays to, in addition to Solar Rewards, get credit for the energy they put back into the grid to be sold to others. The commission earlier this year separated a discussion of net metering from the overall review after Xcel proposed taking steps to inform consumers what part of the net-metering credit reflects the value of the energy produced and what part should be seen as a subsidy. Solar proponents have objected, saying they believe Xcel is laying a foundation for changes to net metering that could hurt the solar power industry. Utility companies have been challenging net metering around the country.

Grand Junction Chamber of Commerce Energy Briefing Lunch: Colorado’s Solar Energy Industries Association

May Energy Briefing Focuses On Solar With the weather getting warmer and the days getting longer it seems only appropriate that our next Energy Briefing on May 14th will focus on recent developments in solar energy. Rebecca Cantwell, Executive Director of the Colorado Solar Energy Industries Association (COSEIA) will keynote this luncheon. Colorado is one of the states leading the effort in using renewable energy. About one year ago COSEIA, and solar business leaders kicked off the state’s million solar roofs campaign, an effort to get one million homes and businesses utilizing this renewable resource. All luncheons start promptly at 12:00 PM and registration, including lunch is $15 for GJACC members. When: Wednesday, 5/14/2014 12:00 PM to 1:15 PM Where:Mesa County Libraries 443 N 6th St Grand Junction CO 81501 How Much: $15 Register Here: Grand Junction Chamber of Commerce 970-242-3214 or 800-352-5286