Should utilities care about the CPP anymore? Should they even address the proposals in their risk management and strategic planning activities? Yes, we believe they should.

Ongoing debates around the Clean Power Plan (CPP) include comments on relevancy, legitimacy, potential impacts on reliability, and even the timeliness of the proposed EPA regulations. Many utilities and regulators are already engaged in discussion of retirement, replacement, and upgrades of coal-fired power plants. The National Rural Electric Cooperative Association (NRECA) and States Attorney General in multiple states have filed comments that question the authority of the EPA in this action. The new Congressional realities with Republican majorities in each house may well produce further review, modifications, and delays waiting for a new presidential administration in 2017.  Even the EPA has pushed back the timeline for approval by at least 6 months to consider the millions of comments received on the plan.

In light of these impacts on the potential regulations and their enforcement, should utilities care about the CPP anymore?  Should they even address the proposals in their risk management and strategic planning activities? Yes, we believe they should. The debate has produced new insights at the regional and state levels and has generated stakeholder activity that continues to develop and advance the dialogue. If the CPP is enacted, even in some modified form, it is probable that competing interests at the state level will remain as interested and motivated active parties. Even if the CPP is not enacted there will be continued strong stakeholder debate at the state level around the same issues.

For instance, a recent report by CNA Corp shows that the Texas power sector could cut water use by as much as 35% with reduced coal power generation due to energy conservation and more natural gas combined cycle plants which use less water for cooling purposes. This perspective of identifying and valuing ancillary benefits of the CPP will provide further incentives for the state of Texas to continue to focus on CPP activities. Another recent study commissioned by the Advanced Energy Economy Institute finds that compliance with the CPP is unlikely to materially affect reliability. This report provides further insight into the options in play and under development, including advanced energy technologies, which will increase the reliability and resiliency of the electric power system – not reduce it. The reliability debate at the state level and the role of distributed generation continues to have significant policy impact.

Certain states with vested interests in coal resources (Kentucky, Virginia, and Pennsylvania) are enacting their own legislation to hinder or delay implementation of any plan, including the state’s right to veto  the plan (West Virginia, Minnesota, Colorado). This path is a slippery slope for utility policy and planning, and can have unintended consequences that utilities need to account for. This state-federal debate keeps the utility directly in the middle and increases the need for strategic balancing of these interests.

The state regulatory options have been further debated at the winter National Association of Regulatory Utility Commissioners (NARUC) meetings with local preferences and impacts ranging from reliability to the expanded use of distributed generation, demand response, and renewable energy. These are all building blocks in the CPP model and will continue to evolve as impacts and opportunities for utilities.

Each utility will ultimately modify or adopt a unique business model that includes the needs and impacts of a variety of people, processes, and technologies. The CPP debate has placed many of these issues under increasing scrutiny and debate. We believe the interest and activity on these issues will not decline and will in fact accelerate as various regulatory, technologies, and stakeholder processes evolve throughout the country. Prudent utilities should continue to examine the CPP impacts and processes and integrate the likely outcomes into their own strategic and operational planning.

Jack Winter, Senior Principal
jwinter@westmonroepartners.com