2015 Chestnut Street, Camp Hill, PA 17011 Phone: 717-763-7635, Fax: 717-763-7455, www.arippa.org

Pennsylvania Department of Environmental Protection Policy Office Rachel Carson State Office Building P.O. Box 2063 Harrisburg, PA 17105 To Whom It May Concern: Subject: Comments and Suggestions for Pennsylvania’s Clean Power Plan ARIPPA respectfully submits the following comments and suggestions regarding the development of the “Pennsylvania Clean Power Plan” which is required by the United States Environmental Protection Agency (‘EPA”) Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (the “Clean Power Plan Rule”) announced by EPA on August 3, 2015 and published in the Federal Register on October 23, 2015. The Clean Power Plan Rule will become effective on December 22, 2015. ARIPPA ARIPPA is a consortium of companies whose members operate small, independent coal refuse burning steam-electric facilities, principally in Pennsylvania. These plants utilize fluidized-bed combustion boilers in which finely crushed limestone is burned along with processed coal refuse (residue from historic anthracite and bituminous coal mining operations) to generate electricity. In addition to generating electricity, the coal-refuse-to-energy industry is directly involved in large-scale environmental remediation activities across the Commonwealth. Removal of coal refuse piles (remnants of a past mining era) and attendant reclamation activities that are part and parcel of the coal-refuse-to-electricity generating process result in the restoration of ecologically damaged sites and polluted water bodies caused by pre-act mining. (i.e., before enactment of the federal Surface Mining Conservation and Reclamation Act.) To date, our industry has removed over 214 million tons of coal refuse from the environment, reclaimed thousands of abandoned mine land acres through disposal, compaction and grading of the alkaline ash generated by FCBs and, by eliminating the major source of acid mine drainage, improved countless miles of streams. ARIPPA members perform their work at no cost to taxpayers and without using any money from the federal Abandoned Mine Fund, thus increasing the AML acreage that could be reclaimed with this federal revenue source.

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Frankly, because of limited dollars for clean-up and the magnitude of PA’s past mining legacy, unless ARIPPA members continue to operate their coal refuse generating facilities, coal refuse piles already blighting the coal fields’ landscape will continue to produce acidic discharge and be the source for uncontrollable air pollution caused by spontaneous combustible mine fires. Our industry has been the major source for removing these specific environmental hazards. The uniqueness of the refuse-to-electricity industry is its operations have both the capability to generate affordable and reliable electricity and, at the same time, correct environmental problems like acid mine drainage and abandoned mine lands. Therefore, in your zeal to establish carbon emission standards for existing fossil fuel power plants, don't jettison this fuel source from PA's energy profile and eliminate the attendant environmental benefits. Environmental stresses are not limited to air quality challenges but equally extend to land and water. These issues need to be balanced and addressed holistically, not in a vacuum, to allow the Commonwealth to maximize its resources to bring about lasting improvements. Therefore, when formulating a draft compliance plan for carbon emission reductions, our plants' air quality footprint should be evaluated within the context of our contributions to land and water quality and our ability to generate an affordable and reliable source of electricity. Recognition of this unique combination should militate towards the development of a plan that either includes an alternative standard specific to coal refuse plants or an allocation strategy in which allowances are provided to this industry in sufficient quantities to ensure continued operation. Specific Comments regarding a Pennsylvania Clean Power Plan While we do have serious concerns with the legality and applicability of the federal CPP rule, those issues will be vetted and decided in federal court. The purpose of our comments is to identify a way to stem the considerable loss of jobs and tax dollars that has been occurring through the retirement of coal refuse-fired electric generating units. ARIPPA believes that a Pennsylvania Clean Power Plan compliant with the Clean Power Plan Rule can be accomplished in a fashion that doesn’t pick energy winners or losers nor rely upon increasing the price of electricity for its success. This is extremely important to the industries and companies, including electric generators, that have made and continue to make considerable investment in Pennsylvania, the men and women who currently have family sustaining jobs because of these investments, electric customers in Pennsylvania, electric customers in other states that buy electricity generated in Pennsylvania and consequently to the long term economic well-being of the Commonwealth of Pennsylvania. However, this will take a commitment from all public and private stakeholders to work through the issues (not rush to finalize with a preconceive plan) to develop a Plan that meets the Section 111(d) requirements as well as the principals outlined by DEP. ARIPPA believes a Pennsylvania Clean Power Plan compliant with the Clean Power Rule can be accomplished because of the considerable reductions in carbon dioxide (CO2) emissions which have resulted from the retirement and fuel conversion of coal-fired electric generating units. The level of these CO2 reductions is substantial and has been achieved through life-changing costs to the former workers at the retired and fuel converted plants, the workers and industries that supported the retired plants, the communities in which the retired plants were located and the companies that own the retired plants.

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Using the CO2 emissions data available from EPA’s Clean Air Market Division website, http://ampd.epa.gov/ampd/, adding the CO2 emissions of Section 111(d) affected sources that aren’t in the database, adjusting the emissions from the sources that will be converted to natural gas firing, and adding the emissions that will occur from the Section 111(d) affected natural gas fired generating plants currently under construction, the projected emissions from these affected plants will be approximately 100-105 million tons of CO2 per year. When that is contrasted with the Pennsylvania interim CO2 emission budget contained in the Clean Power Plan Rule, reflected as annual average emissions of 99,330,827 tons of CO2 over the 2022-2029 period, we are extremely close to meeting this interim requirement. These CO2 reductions have occurred and are occurring without being subject to any regulatory mandate. These downward emission trends allow PA to utilize an “all of the above” strategy. However, it must be accomplished through reasoned, pragmatic solutions that while taking time to implement, will allow participation by all the various electric generation and energy efficiency resources that meet the objectives of the Commonwealth. For a state like Pennsylvania where numerous electric generating facilities have recently retired or are converting to use natural gas, there is the opportunity to preserve the remaining fossil fuel-fired electric generating units, and the economic benefits they provide, as well as provide for investments in renewable resources and energy efficiency. Importantly, it should be recognized that EPA’s Clean Power Plan Rule has been developed with little consideration of its impact upon Section 111(d) affected sources that participate in regional wholesale electric markets. This is of particular concern to Pennsylvania’s affected sources because Pennsylvania is part of the PJM Interconnection LLC (“PJM”). PJM is a regional transmission organization operating an interconnected electric transmission system or “grid” serving all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM is considered to be the largest wholesale electric market in the world. While EPA’s Clean Power Plan Rule allows for various measures to be used, state measures incorporated into state plans must be implemented and adopted as a matter of state law. While this may be appropriate for rate-based utilities with both electric generation and transmission and distribution obligations within defined service territories, it is inappropriate to adopt by law measures that favor one type of competitive electric resource which is preferred politically over another option that is meeting its regulatory requirements. To the extent that project costs associated with the Clean Power Plan are incurred by the rate-based utilities that invest in such projects to achieve compliance with a state plan, the utilities will likely fully recover those costs along with a rate of return on those investments approved by the state’s public utility commission. That recovery mechanism is not available for generation assets that operate in wholesale electric markets such as PJM. The liabilities, compliance costs and obligations associated with such a plan will fall solely upon the shoulders of the generation companies, their shareholders, their employees and the communities where the impacted facilities are located. This is the case in Pennsylvania where there is no regulated recovery mechanism for costs associated with the adoption of a Clean Power Plan for the Commonwealth. This competitive disadvantage between regulated and deregulated generation unites needs to be addressed.

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ARIPPA submits the following comments on a Pennsylvania Clean Power Plan: Pennsylvania’s Clean Power Plan should not include the new electric generating units New fossil fuel-fired electric generating units will be regulated under Section 111(b) of the Clean Air Act on December 22, 2015. Existing fossil fuel-fired electric generating units on the other hand are regulated under Section 111(d) of the Clean Air Act but that can only occur after the source category is regulated under Section 111(b). If Pennsylvania desires to establish additional regulatory requirements for new fossil fuel-fired electric generating units then Pennsylvania should proceed with a full and complete rulemaking proceeding. EPA does not mandate the inclusion of new sources under Section 111(d) Clean Power Plan Rule because it lacks the authority to do so. Regardless of EPA providing an emissions budget or rate-based limit which includes new sources, Pennsylvania should not include Section 111(b) affected sources in the Pennsylvania Clean Power Plan without a specific Pennsylvania rulemaking relating to that single issue. On a more practical level, the difference between the existing unit-only interim emission budget and the existing unit plus new source complement emission budget is only 1.26 million tons of CO2. That amount of CO2 is about equivalent to the CO2 emissions from a natural gas-fired combined cycle facility with an installed capacity of 800 MW operating at a capacity factor of about 45%. To include those Section 111(b) affected sources with that very small corresponding increase in the emissions budget would further stress the remaining Section 111(d) affected electric generating units to the point that certain of these facilities (primarily coal and/or coal refuse facilities) can no longer successfully participate in the wholesale electric market. Pennsylvania’s Clean Power Plan should not be developed in a manner to force the retirement of the remaining existing electric generating resources Section 111(d) of the Clean Air Act only affects existing fossil fuel-fired electric generating units. Pennsylvania’s Clean Power Plan should not be used to force the Section 111(d) affected sources to shut down causing unnecessary and grievous economic harm in the communities where these remaining existing fossil fuel-fired electric generating plants are located. Something that appears to have been ignored in the ideological debate that has transpired regarding the development and implementation of the Pennsylvania Clean Power Plan is that considerable CO2 reductions have already occurred in the commonwealth and will continue to occur for reasons other than the regulation of CO2. Using the CO2 emissions data available for 2014 on EPA’s Clean Air Market Division’s website; eliminating the CO2 emissions from sources that have been retired and are scheduled for retirement; adjusting the CO2 emissions from those sources that will be converted to natural gas; and adding CO2 emissions for the affected units that are currently under construction, the annual CO2 emissions from the Section 111(d) affected electric generating sources in Pennsylvania will be approximately 100 to 105 million tons. To provide context to this projection, the interim Pennsylvania CO2 emissions budget contained in the Clean Power Plan Rule for the 2022-2029 period can be represented as 99,3330,827 tons of CO2 per year. Under the most conservative estimate, defined as the largest likely CO2 emissions, the Section 111(d) affected sources in Pennsylvania will have nearly achieved the interim budget well in advance of the first year of the interim budget, 2022.

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These retirements have occurred due to wholesale market pricing issues, low cost natural gas and other environmental regulatory requirements not associated with the control or reduction of CO2 emissions. Thus, it seems unnecessary to implement a strategy to force even more existing electric generating units to shut down, especially when these remaining facilities are the critical electric generating units that will help to maintain electric grid reliability while Pennsylvania continues to pursue the diversification of its electric generating resources. These critical electric generating units include ARIPPA member facilities that are also providing multi-media environmental benefits through land reclamation and water abatement activities. Based upon the CO2 emissions reductions that have occurred in the PJM wholesale electric market without any CO2 emissions reduction obligations, it would seem that lower cost natural gas and renewable sources of electricity, will provide for any necessary additional future CO2 reductions from the existing Section 111(d) affected sources through the effects of market forces, even without a Pennsylvania Clean Power Plan. Pennsylvania’s Clean Power Plan should be implemented using a mass-based approach that initially only includes the remaining existing fossil fuel-fired electric generators but upon future retirements provides for distribution of allowances to other qualifying resources Pennsylvania’s Clean Power Plan should be mass-based and rely upon allowances which are serialized in a fashion that clearly identifies the vintage of the allowance. In the beginning of the plan, the entire Pennsylvania interim existing units budget identified in EPA’s Clean Power Plan Rule should be allocated as allowances to the existing Section 111(d) affected sources. In the event that any existing remaining Section 111(d) affected sources are retired after the effective date of EPA’s Clean Power Plan Rule, then the allowances that otherwise would have been allocated to that source should be divided between the remaining Section 111(d) sources and a pool that is used to provide allowances to other electric generating resources which qualify for consideration under Pennsylvania’s Clean Power Plan Rule. The distribution of future retired Section 111(d) affected sources should be equal between the remaining affected units and the allowance pool. The reasons for using a mass-based plan are:

All reductions, regardless of reason, are inherently recognized

The mass-based program will be easiest to administer

Unused allowances will provide for the effective “banking” of emission reductions for future accounting of emissions

A mass-based program will provide the best opportunity to engage in formal multi-state programs

As long as a few critical elements such as quantification of emissions and the compliance period are consistent, then the allowances will be equal. Other actions, such as allowance allocation methodologies, can be completely unique to the individual state plans

Allowances from retired sources can provide for economic opportunities for the remaining existing Section 111(d) affected sources. Additionally, a portion of those allowances can be used to recognize the impact of other electric resources

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However, it must be recognized that the success of a mass-based plan that utilizes allowances is completely dependent upon the methodology for the allocation as described below: Pennsylvania’s Clean Power Plan should provide for participation in a formal multi-state agreement Pennsylvania’s participation in a formal multi-state trading agreement is highly desirable and will further enhance the success of the program. However, it is important that this group consist of states with coal and/or coal refuse-fired electric generating units and the industries that support those assets and other similarities in their economies to that of Pennsylvania. This multi-state agreement would provide for the best opportunity for a viable, functioning trading platform which will serve to reduce the cost of meeting the existing Section 111(d) emissions budget for Pennsylvania. (Northeastern Regional Greenhouse Gas Initiative (RGGI) does not meet these criteria.) Pennsylvania’s Clean Power Plan should also allow for averaging or trading among sources in different states, including among sources which are not under common control or ownership While a formal multi-state mass-based allowance program is preferable, it would be appropriate to allow averaging between sources in Pennsylvania and sources in other states so long as the participating sources are able to accurately quantify emissions and document that the appropriate accounting is recognized in each state. It is essential when developing this program to ensure that the emission budget in all states where the participating sources are located are protected and that no unaccounted emissions occur. Pennsylvania’s Clean Power Plan must provide allocation strategies that meet the regulatory obligations for Section 111(d) affected sources while not disadvantaging those resources Pennsylvania’s allocation strategy should first be designed to accommodate its remaining domestic Section 111(d) affected electric generating units located within its borders. As previously discussed, CO2 emissions reductions paid for by the economic hardships and upheaval already experienced in communities due to coal-fired plant retirements and conversions to burn natural gas, should be used to avoid or minimize those same economic hardships and upheavals in the communities where the remaining, existing electric generating units are located. In states where virtually all of the electric generating resources participate in the PJM wholesale electric market, it is inappropriate for legislators or regulators to pick the “winners and losers” in the competitive marketplace. As mentioned previously, EPA’s Clean Power Plan Rule is intentionally or unintentionally premised upon electricity being generated and provided by rate-based utilities with the benefit of a full cost recovery mechanism available to them. In those circumstances, the rate based utilities will recoup the cost of their required plan compliance investments as well as a regulatory specified return on those investment. Specifying that any state measures included in the plan must be adopted and implemented as a matter of state law appears to demonstrate EPA’s recognition that in wholesale electric markets the appointed environmental and executive branch officials do not have the authority to require electric resources take certain actions without the approval from the affected legislatures.

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Specific allowance allocation considerations for inclusion in Pennsylvania’s Clean Power Plan

Initially, only Section 111(d) affected electric generating units should receive an allowance allocation. If the emission budget is “over-subscribed” then the allowances should be distributed to these Section 111(d) affected sources on a pro-rata basis such that all allowances to be distributed to the affected sources are allocated for each compliance period. An affected source that retired is not eligible for allowances from the allowance pool at that point. An affected source converts to a different fuel, the emissions characteristics for that fuel should be used for allocation of allowances for the next subsequent compliance period and any future compliance periods for which the affected source receives allowance allocations while using that fuel. Public statements have documented that the Department is planning on submitting its Clean Power Plan by Sept. 6, 2016 in order to qualify for EPA’s Clean Energy Incentive Program, which is supposed to encourage additional investments in renewable energy and demand side energy management programs. To make early investment in these programs, EPA is planning on matching allowances set aside up to 300 million prorate based on the State’s set aside. In addition, this program is also targeting investments in low income communities. The basis for the CEIP is to provide funding for these resources by selling those allowances to the Section 111(d) sources which are obligated to surrender allowances to account for emissions. While this sounds like a simple strategy to have electric customers to pay for the expansion of these resources, in wholesale electric markets it will serve to further stress the Section 111(d) affected sources with another cost that will increase their price to the point they can’t survive. While the intent is represented as a positive for those resources, using allowances in this fashion prior to the retirement of more Section 111(d) sources as a source of those allowances simply means that further stresses are placed on the ability for the affected sources to be able to successfully participate in the wholesale electric market. In order for a state to participate in the program, it must include in its initial submittal, if applicable, a non-binding statement of intent to participate in the CEIP. The State should be able to request an extension to submit its final plan by Spt. 6, 2018.

Based on power point presentation at the Climate Change Advisory Committee on Nov. 3, 2015, (Slide 12) identifies the Clean Power Incentive Program as a key consideration. As such, it would appear that the DEP is anticipating setting aside a portion of the State CO2 Budget for this program. As a result, it would appear that the remaining allowances would be more than the fund, how the remaining allowances are allocated is a program that needs to be fully vetted. The following are basic concepts that need to be considered as well as to the level DEP may want to set aside, if it proceeds moving forward to implement the program.

If the targeted levels have not been achieved, than allocations of the targeted emission levels should utilize the following concepts when making the allocations:

o Initially, only Section 111(d) affected electric generating units should receive an

allowance allocation. Allowances should be distributed to the Section 111(d) affected

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sources on a pro-rata basis such that all allowances to be distributed to the affected sources are allocated for each compliance period.

o Allowances should be allocated in a fashion that recognizes different fuels and the

technologies used to combust such fuels. It would be most appropriate to develop emissions characteristics (e.g. pounds of CO2 per million Btu heat input, pounds of CO2 per gross megawatt-hour, etc.) for the different fuels (i.e. coal refuse, coal, natural gas, etc.) and methods used to combust the fuel (i.e. fluidized bed combustors, pulverized coal boilers, simple cycle combustion turbines and combined cycle combustion turbine, etc.) to use for the allocation of allowances to Section 111(d) affected sources. All of those characteristics are inherently included in the emissions inventory that represents the currently remaining existing Section 111(d) resources in Pennsylvania. If the allowances are all initially distributed to Pennsylvania Section 111(d) affected sources on a pro-rata basis, then all of the different remaining affected sources will be equally affected. In the event an affected source converts to a different fuel, the emissions characteristics for that fuel should be used for allocation of allowances for the next subsequent compliance period and any future compliance periods for which the affected source receives allowance allocations while using that fuel.

o Adoption of innovative CO2 reduction technologies should be encouraged. In the event

an affected source installs a CO2 emissions control technology, such as carbon capture and storage (CCS), the allocations should continue to be based upon the emissions characteristics of that affected source prior to the installation and operation of the technology. Future allocations should not be reduced based on the emissions characteristics established through the operations of that control technology.

o Allowances should be allocated in three year block time periods. Any allowances from

a current vintage block of allowances or any previous vintage block of allowances should be able to be used to account for emissions that occur during the three year allocation period. Allowances that would be allocated for any future compliance period should not be permitted to account for emissions that occur during any previous three year compliance period.

o Section 111(d) affected sources that are retired or “mothballed” should not continue to

receive allowances under the Pennsylvania Clean Power Plan. Instead, those future vintage allowances should be allocated to the remaining Section 111(d) affected sources and also be used to provide allowances to a pool which can be used to recognize the resources which qualify under the Pennsylvania Clean Power Plan. The allowances to be allocated to the remaining Section 111(d) sources should be distributed on a pro-rata basis using the initial allocation methodology. Importantly, the Pennsylvania emissions budget should not be reduced when Section 111(d) affected electric generating units are retired or “mothballed.”

o Qualifying electric resources that are not Section 111(d) affected sources, but are

allocated allowances from the pool developed from retired or mothballed Section 111(d) affected sources, must be held to the same high standards of quantification as

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are the Section 111(d) affected sources. Further, they should be held to the same standards for non-compliance if they misrepresent the emissions benefits of the resource or fail to achieve the benefits for which they are receiving allowances. Underperforming resources should also be obligated to return allowances they have received if they cannot demonstrate on a continuing basis that they are providing the benefits for which they have received allowances. Those allowances should be returned to the “allowance pool” for allocation to other qualifying resources.

o Those existing remaining Section 111(d) affected electric generating units with unique

environmental attributes should be recognized. An excellent example of those attributes are the multi-media environmental, health and safety benefits provided by the coal refuse-fired electric generating units. The coal refuse to energy industry is the only solution to the environmental blight of coal refuse that permanently addresses the issues in a holistic fashion. The coal refuse to energy process includes removal of the coal refuse; combustion in a fluidized bed boiler with limestone; the generation of electricity; the production of beneficial use ash; and the utilization of that beneficial use ash to remediate lands and water sources previously affected by mining. This process returns mining affected lands to a variety of productive uses including industrial, commercial and recreational activities as well as wildlife habitat. This process is the only solution that permanently addresses surface and ground water acid mine drainage (AMD), potential mine fires and the resulting air pollution as well as the significant human health and safety issues associated with unreclaimed mining areas. The beneficial environmental attributes of these facilities can be recognized beginning in the initial allowance allocation or it can be provided in the allocation of allowances from the retirement or “mothballing” of other Section 111(d) affected sources. Another example of a Section 111(d) affected source providing a unique environmental benefit would be an affected source that helps Pennsylvania achieve other environmental goals such as meeting the Commonwealth’s Chesapeake Bay cleanup obligations. The recognition of these types of benefits can and should be provided in the allowance allocation methodology.

o The operational information used in the allowance allocation methodology should be

routinely updated. The operational period used in the allowance allocation methodology should be a five year block time period which is updated routinely (e.g. operations during the 2016-2020 period could be used to calculate the allowance allocations for the 2022-2024 period, followed by the 2019-2023 operations period being used for allowance allocations for the 2025-2027 period, and so on). This will result in allowance allocation updating to reflect more current operations of each affected source. This will allow operators of affected sources receiving allowance allocations to understand the operations periods and the effect of modified operations on their future allowance allocations. However, operations during an allowance allocation operations period should not provide for the continued allocation of allowances to retired or mothballed Section 111(d) affected electric generating units or to a Pennsylvania Clean Power Plan qualifying resource that no longer provides the emissions reduction which it initially claimed. Beginning the three year allocation period, after the period in which a Section 111(d) affected source or qualifying resource discontinues operations, retires, is mothballed, or ceases to provide the quantified benefit, those and other future vintage

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allowances should be allocated to the remaining Section 111(d) affected sources and an equal portion contributed to the allowance pool for resources that qualify under the Pennsylvania Clean Power Plan. In the case of the Section 111(d) affected units currently under construction, those units should use the first available full year of operations through 2020, adjusted to reflect five years of operations, as the baseline for that allocation period.

o Unlimited “banking” of unused allowances and the unlimited use of previous vintage

allowances should be permitted. The banking of unused allowances and the ability to use them to account for future emissions provides an incentive for early action by the Section 111(d) affected sources. The ability to “bank” those allowances is something that can offset the typical negative effects that air quality regulations impose upon a source that controls emissions before a compliance date or controls emissions beyond a specified limit. Banked allowances should be retained by the Section 111(d) affected sources and other qualifying resources upon cessation of operations, retirement or mothballing of the affected source or the termination of a qualifying resource.

o Pennsylvania’s Clean Power Plan should not include a requirement for Section 111(d)

affected sources to purchase allowances to account for emissions. The requirement to purchase allowances is ultimately a “tax” on electric customers that is implemented with an underlying strategy to cause certain affected generation sources to become uncompetitive. This is demonstrated in the implementation of the Regional Greenhouse Gas Initiative (RGGI). Information obtained from the RGGI website documents that the generation of electricity in the RGGI states has decreased by 18.8 million MWh while the amount of electricity imported into the RGGI states has increased by 11.8 million MWh. As such, this approach would result in the State no longer being a net exporter of power. Consequently, while there have been CO2 reductions in the RGGI states, it can be estimated that over 60% of the CO2 reduction has occurred as a direct result of a reduction in the amount of electricity generated within those states.

Pennsylvania’s participation in a RGGI or a RGGI-like program, would only be to the competitive detriment of Pennsylvania's electric generation industry. Imposing this type of “tax” on electric customers will increase electricity rates and likely result in Pennsylvania changing from an exporter of electricity into an importer of electricity. Currently, Pennsylvania is the second largest generator of electricity and the largest exporter of electricity in the United States, consequently this switch would have a devastating effect upon jobs and the economy in Pennsylvania.

o States that use mass-based programs with allowances should not be required to

duplicate the resources already available from EPA. EPA’s Clean Air Markets Division should provide the logic and software to allow the states to successfully manage mass-based programs which use serialized allowances across a common platform.

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Pennsylvania, EPA and other states should begin efforts to work with federal legislators to change the new source review (NSR) applicability test for efficiency projects “Building Block 1” of EPA’s Clean Power Plan rule is efficiency improvement at the Section 111(d) affected electric generating units. An affected source implementing an energy efficiency project would be required to perform a new source review (NSR) applicability test to determine if the project is a “modification.” The current NSR applicability test requires the development of baseline mass emissions (tons per year), which reflects actual baseline operations. Consequently, sources that have reduced emissions or operations prior to any obligation to reduce emissions are then limited to the actual historical level of emissions and possibly a small additional amount known as the significance threshold. If they exceed those mass emissions, the project is defined as a modification and the source becomes subject to much more stringent regulatory obligations known as best available control technology (BACT), or lowest achievable emission rate (LAER) if the area is non-attainment for a particular pollutant. It is neither reasonable nor desirable to penalize a source which has reduced its emissions through an efficiency project to be limited in such a fashion. These are now the units that would be more desirable to operate because they have achieved a reduction in emissions intensity of all pollutants, not just CO2. It would be more appropriate to make the applicability test for efficiency projects to be “output based.” For example, in the case of an electric generating unit, if all pollutants are reduced on a pounds per gross Megawatt-hour (GMWh) basis then NSR requirements, BACT or LAER, would not be triggered. The environment would continue to be protected because that source would have lower intensity of emissions and that unit is not allowed to cause or contribute to non-attainment of an ambient air quality standard or exceed any permitted emissions limit that might exist. A source that has not implemented an efficiency project and is able to return to operations and emissions at full permitted potential, regardless of their historical operating level. It seems that the current NSR requirements favor sources not undertaking projects that would increase their efficiency and reduce their output based emission rates for all pollutants. Another option would be to provide for an efficiency project exemption similar to the pollution control project exemption that is allowed in 40 CFR Part 60, §60.14(e)(5). An efficiency project then could be identified as any project that results in the reductions of all pollutants on an output basis. To provide this opportunity to maximize the benefits of energy efficiency for electric generators as well as all other source categories, seems to be completely consistent with everyone’s goal of becoming more efficient and reducing CO2 emissions. The State, the state legislators, and EPA should immediately begin to work with federal legislators to develop and achieve any necessary amendments to the Clean Air Act that mandate that one of these two options are used to change NSR requirements for efficiency projects. Conclusion We are concerned that the rush to file the Clean Power Plan early is tied to the Clean Energy Incentive Program aspects of the Federal Rule as a means of obtaining additional allowances from “EPA’s Allowance Pool” to promote wind and solar. A rush to achieve additional allowances will jeopardize

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Pennsylvania’s commitment to a Pennsylvania centric plan that serves Pennsylvania and maintains its net exporter status. With the amount of gas plants projected to be built in Pennsylvania and the surrounding states (i.e., New Jersey were 2000 MW of New Gas Generation cleared the PJM Capacity Market for 2018-2019), there will be significant economic stress that many of the older existing electric generating facilities in Pennsylvania will be reducing capacity, converting to gas, or retiring. IF this occurs, the 2030 CO2 emission objectives related to CO2 emission reductions may be achieved and would allow the remaining facilities to operate and be competitive in today’s and tomorrow’s PJM market place. The CPP is as much an energy rule as it is an environmental rule having significant impacts on interstate commerce. We ask, respectfully, that you do not rush to judgement. The state compliance plan will have significant ramifications on the supply, distribution and use of electricity for generations to come. Understand the consequences - both deliberate and unintended - of the draft. Considering the immediate, broad-reaching and long term economic consequences of this energy plan, it is our hope that this plan will not be rushed to finalization and that Pennsylvania provides the additional time necessary to engage the various stakeholders in a meaningful and transparent process. In this light, we ask the Commonwealth to seriously consider availing itself of the 2-year plan submittal extension. This will ensure that time is available to completely perform the due-diligent work, including the technical analysis and modeling assessments, compliance with Act 175 requirements, a robust public participation process, consultation with reliable entities like the PUC, FERC and PJM, and coordination among states if a multi-state plan is being considered. Sincerely, George Ellis, Executive Director ARIPPA 2015 Chestnut Street Camp Hill, PA 17011 717-763-7635