POWER PLAN IN WISCONSIN€¦ · 2 EXECUTIVE SUMMARY In August 2015, the Environmental Protection Agency (EPA) finalized the Clean Power Plan, which regulates carbon dioxide emissions

CLEANPOWERPLANINWISCONSINAnanalysisofthreewaysWisconsincancomplywiththeCleanPowerPlanandwhatimpactsthosepathwaysmayhaveonthestate

December2015

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EXECUTIVESUMMARYInAugust2015,theEnvironmentalProtectionAgency(EPA)finalizedtheCleanPowerPlan,whichregulatescarbondioxideemissions(CO2)underSection111(d)oftheCleanAirAct.TheCleanPowerPlansetsstatetargetsforemissionsreductionsfromlarge(>25megawatt)existingfossil-fuelpowerplants,basedonthe“BestSystemofEmissionsReduction”(BSER)asdeterminedbytheEPA.Eachstateorregulatedareaisrequiredtodevelopitsownplanformeetingthosetargetsoneitherarate-ormass-basis,orfollowafederalplanestablishedbytheEPA,by2016(withapossibleextensionto2018).Interimtargetsthengointoplacestartingin2022,withfinaltargetsin2030.ForWisconsin,thetargetsare:

Table ES-I: Wisconsin CO2 Emissions Goals for Affected Units under the Clean Power Plan

WisconsinCO2EmissionsGoalsforAffectedUnitsundertheCleanPowerPlan

Interim Goal -

Step 1 Interim Goal -

Step 2 Interim Goal -

Step 3 Overall Average

Interim Goal Final Goal

(2022-2024) (2025-2027) (2028-2029) (2022 - 2029) (2030)

Emissions Rate 1,479 lb/ MWh 1,335 lb/ MWh 1,236 lb/ MWh 1,364 lb/ MWh 1,176 lb/ MWh

Total Emissions 33.51 mil. tons 30.57 mil. tons 28.92 mil. tons 31.26 mil. tons 27.987 mil. tons

TheBSERthatEPAusedtosetthosegoalsconsistedofimprovementsintheefficiencyofcoal-firedpowerplants,increaseduseofnaturalgascombinedcycle(NGCC)powerplantstocreateelectricity,andincreasedelectricitygenerationfromemissions-freerenewableenergy.Statesarenotlimitedtothosecategoriesinmeetingtheirgoals,butcanproposeawidevarietyofothermeasurestoreduceemissionsfromaffectedunits.Forexample,theEPAhasprovidedasignificantamountofinformationonhowenergyefficiencycanbecountedandusedforcompliancewiththeCleanPowerPlan.

Inthisreport,wedescribeandprovidetheresultsofarigorousanalysisofthepotentialforbothemissionsreductions and statewide electricity cost impacts of three separate but related paths that the state ofWisconsincouldpursuetocomplywiththeCleanPowerPlan.Eachpathstartswithanincreaseinenergyefficiency in the state, then considers the potential for incremental reductions in emissions based onexistingpolicies,suchasexpandingthestate’sRenewableElectricityStandard,andexistingtechnologies,such as increasing the state’s use of current natural gas plants and using current coal plants moreefficiently.Thecompliancepathsarenotmeanttobeanexhaustiveconsiderationofallpotentialemissionsreductionmeasures,but insteadprovide informationon the impactsof a subsetof actions that couldbetaken, which together represent plausible ways the state ofWisconsin couldmeet the standards of theCleanPowerPlan.

Our analysis found that any of the paths assessed would be sufficient to meet the requirements of the Clean Power Plan for Wisconsin.

OuranalysisfoundthatanyofthepathsassessedwouldbesufficienttomeettherequirementsoftheCleanPowerPlanforWisconsin.ForexamplePathA,theMinimumCompliancePaththattooktheleastaggressivestepstowardemissionsreduction,wouldresultina35.7%reductionincarbondioxideemissionsfromaffectedsourcesin2030,goingfrom42.3milliontonsperyearto27.2milliontonsperyear.

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Figure ES-1: Wisconsin CO2 Emissions Resulting from Compliance Path A - “Minimum Compliance”

WealsofoundthateithertheMinimumCompliancePath(PathA)orPathB,the“ModerateReductionsPath”thatconsistedofslightlylargeremissionsreductionsmeasures,wouldresultinanetcostsavingsforthestatecomparedtoabaselineoftakingnoactiontocomplywiththeCleanPowerPlan.PathC,orthe“EasilyAchievableSavingsPath”offeringthelargestemissionsreductionpathconsideredinthisanalysis,wouldresultina1.25%increaseintotalelectricitycostsstatewidecomparedtothatsamebaseline.Forcomparison,apaththatminimallycomplieswiththeCleanPowerPlan(asinPathA)butdoesnotincreaseenergyefficiencyeffortsinthestatewasfoundtocostthestate$203.7millionmorethanthebaseline.

Table ES-II: Costs of Compliance with the Clean Power Plan in Wisconsin

Costs of Compliance with the Clean Power Plan in Wisconsin

Path A: Minimum

Compliance Path B: Moderate

Reductions Path C: Easily Achievable

Savings

Increase in Energy Efficiency $117.6 million $140.9 million $160.5 million

Increase in Renewable Energy $227.6 million $305.6 million $437.5 million

Increased Use of Natural Gas $145.8 million $233.7 million $390.6 million

Reduced Fuel Use and Emissions Credits -$546.3 million -$691.6 million -$893.3 million

Net Costs -$55.4 million -$11.3 million $95.3 million

As percent of total costs -0.73% -0.15% 1.25%

ThisanalysisdemonstratesthatcompliancewiththeEPA’sCleanPowerPlancanbeaccomplishedinastraightforwardandcost-effectivemanner.Throughtheutilizationandexpansionofexistingpolicyinfrastructureandusingonlyexistingfossilfuelplantsinthestate,WisconsincanreduceCO2emissionsfromaffectedunitstoanamountsignificantlybelowthegoalssetbyEPAwhilesimultaneouslysavingratepayersinWisconsinmoneycomparedtothebaseline.

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CONTENTSExecutiveSummary...............................................................................................................................................................................1Background................................................................................................................................................................................................4TheCleanAirActandCarbonEmissions...................................................................................................................................5CuttingGreenhouseGasEmissionsfromExistingPowerPlants.....................................................................................5

TheFinalCleanPowerPlan..............................................................................................................................................................6Threebuildingblocks..........................................................................................................................................................................6State-by-stateanalysis........................................................................................................................................................................7MeetingEmissionsGoals...................................................................................................................................................................9Glidepathtocompliance................................................................................................................................................................10CreditforEarlyAction.....................................................................................................................................................................10

Wisconsin’sGoals.................................................................................................................................................................................11Wisconsin’sPathtoSuccess...........................................................................................................................................................12EnergyEfficiency...............................................................................................................................................................................12RenewableEnergy.............................................................................................................................................................................13CompliancewiththeCleanPowerPlan...................................................................................................................................14

WhatitmeansforWisconsin........................................................................................................................................................18HealthinWisconsin..........................................................................................................................................................................18ElectricityBillsinWisconsin........................................................................................................................................................19Wisconsin’sEconomy......................................................................................................................................................................19

ThePathAhead.....................................................................................................................................................................................20AppendixA:CalculationofCompliancePathwayEmissions.............................................................................................21AppendixB:CalculationofCompliancePathwayCosts.......................................................................................................26

CleanWisconsinDecember2015TysonCook,DirectorofScience&ResearchMattLandi,Science&PolicyAssociateKeithReopelle,SeniorPolicyDirector

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BACKGROUNDTheCleanAirActandCarbonEmissionsTheCleanAirAct is the primary federal lawdealingwith air pollution in theUnited States. It is largelyoverseenbytheEnvironmentalProtectionAgency(EPA)andhasbeenrefined,revisedandextendedovertimesinceitwasfirstpassedin1963,includingsignificantamendmentsin1970,1977,and1990.Amongotherthings,theCleanAirActnowregulatesemissionsofairpollutantsfrombothmobileandstationarysourcesandsetsnationalairqualitystandardstoprotectpublichealthandpublicwelfare.Toensurethattheaimofprotectinghealthandwelfareismet,newregulationsbecomerequiredundertheCleanAirActas understanding of air pollution and its impacts increases. The regulation of carbon dioxide (CO2) andothergreenhousegas(GHG)emissionsisoneofthemostrecentadditions.

ThepathtowardCO2andGHGemissionregulationbeganin2007,whentheU.S.SupremeCourtheldthatemissionsofthosepollutantsfromnewpassengervehiclesweresubjecttoregulationundertheCleanAirAct.Specifically,thatrulingestablishedthatthoseemissionsmetthelegaldefinitionofan“airpollutant”asdefinedbytheCleanAirActandrequiredtheEPAtostudywhetherthatpollutioncouldendangerpublichealth or welfare.1When EPA released its “Endangerment Finding” in 2009, it found that CO2 and GHGemissionsfrommotorvehiclesthreatenpublichealthandwelfareinanumberofways.Asaresult,EPAisrequiredbytheCleanAirActtoimplementnewregulationstomitigatetheimpactofthatpollution.

Thefirstofthoselimits,alimitonmobilesourceslikemotorvehicles,wentintoeffectin2010.Inturn,theregulationofmobile sourceCO2andGHGemissions triggered the regulationof stationarysourcesunderthe“NewSourceReview”permittingprogramoftheCleanAirAct,leadingtotherequirementthatnewormodified large facilities (likepowerplants)use “best available control technologies” (BACT)aspartof a“preventionofsignificantdeterioration”programforCO2andGHGpollution.TheEPAphasedinpermittingregulationson the largestsourcesofemissions in2011.Thesameyear, theU.S.SupremeCourtaffirmedthat the CleanAir Act required EPA to regulate CO2and greenhouse gas emissions from fossil fuel-firedpowerplantsspecifically—thelargestsinglesourceofemissionsinthecountry.2

CuttingGreenhouseGasEmissionsfromExistingPowerPlantsThoughthereareawiderangeofactivitiesthatemitCO2andotherGHGpollutionintheUnitedStates,thesingle biggest source of GHG pollution is our energy use, primarily burning fossil fuels for power,transportation,orheat.Thatenergyuse causesover85%of allGHGpollution in theU.S., andelectricitygeneration is the single largest component of those emissions at roughly 36% (a larger portion thanburning fuels for industrial activities or transportation, or the various agricultural, commercial andresidential practices that also emit greenhouse gases).3The story ismuch the same at the state level; inWisconsin, theportionofallGHGemissionscoming fromelectricity is33%,andgenerationofelectricityrepresents41%ofenergy-relatedGHGemissions.4

Along with performance standards for CO2 pollution from new or modified power plants, the EPA isrequiredtoregulateemissionsfromexistingsources. ItreleasedadraftofproposedlimitsunderSection111(d)oftheCleanAirAct,aproposaltheEPAcalledtheCleanPowerPlan,inJune2014.ThefinalCleanPower Plan was initially delayed to allow for additional public comments due to the large interestgenerated,andwasfinalizedonAugust3,2015.Itappliesto“affectedunits,”whicharedefinedaspowerplants in operation as of 2012 that were over 25megawatts (MW) in size and are rated to operate atgreaterthan250millionBtuperhourofheatinputfromfossilfuels.TheCO2limitsforthoseplantsgointoeffectstartingwithinterimlevelsin2022andfinallimitsstartingin2030.

1Massachusettsv.EPA,549U.S.497(2007)2AmericanElectricPowerCo.v.Connecticut,131S.Ct.2527(2011)3VariousSources,viaWorldResourcesInstitute,CAITClimateDataExplorer,accessed2015at:http://cait.wri.org/4Ibid.

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Section 111(d) of the Clean Air Act provides significant roles for both the EPA and individual states inregulatingemissions.EPAfirstestablishesproceduresandguidelinesforemissionsreduction.Oncethoseguidelines are established, states develop and submit plans to meet those guidelines. The EPA thenapprovesordeniesthoseplans,withtheoptiontoimplementafederalplanifthestate’ssubmittalisnotsatisfactory.Dependingonwhetherornotthestate’splansareaccepted,eitherthestateorEPAgoesontooverseetheemissionsreduction.5

THEFINALCLEANPOWERPLANThreeBuildingBlocksTheCleanPowerPlanrepresentsthemostimportantarticlesofguidancethatEPAprovidestostatesunder111(d): It establishes the best system of emissions reduction (BSER) for CO2 from affected units, and itestablishes the expectation for emissions limitations through the use of that BSER.6It does this whileconsideringthingssuchascostsofemissionreductions,publichealthandenvironmentalimpacts,energyrequirements,andalargenumberofotherfactorsspecifictotheelectricitysystem.7Afteryearsofanalysis,outreachandover4millioncomments,8theEPAdeterminedthattheBSERforCO2fromaffectedunitswascomprisedofthree“BuildingBlocks:”

1. Improvedefficiencyofcoal-firedpowerplants2. Increaseduseofnaturalgascombinedcycle(NGCC)powerplantstocreateelectricity3. Increasedelectricitygenerationfromemissions-freerenewableenergy

The specific levels of each building block (e.g. howmuch potential there is for improving power plantefficiency) were analyzed and set separately for each of two source categories: coal & oil/ gas steamturbineplants,andnaturalgascombinedcycleplants.SpecificlevelswerealsoanalyzedandsetforeachofthethreegeneralpowergridsinthecontinentalUnitedStates:theEasternInterconnection,generallyeastoftheRockyMountains;theWesternInterconnection;andtheTexasInterconnection.

BuildingBlock1:Improvedefficiencyofcoal-firedpowerplantsTo determine the Building Block 1 portion of the BSER, EPA used three different approacheslooking at historical heat rates on a unit-by-unit basis across each interconnect. Each of thoseapproachescalculatedpotentialimprovementsifpowerplantsweretomoreconsistentlyperformatornearhighlevelsofefficiencytheyhavedemonstratedsince2002.Aftercalculatingtheaverageimprovements for generators in each interconnect using those approaches, EPA chose themostconservativevalues fortheBuildingBlock1BSER:a2.1%increase inefficiency in theWesternInterconnection,2.3%intheTexasInterconnection,and4.3%intheEasternInterconnection.

BuildingBlock2:IncreaseduseofNGCCpowerplants

ForBuildingBlock2, EPAexamined historical data and conductedmodeling to analyzeNGCCcharacteristicsandoperations. Italsoconsiderednaturalgassupplyanddeliverability issues,and determined that NGCC plants could, on average, achieve utilization of 75% of their netsummer capacity, roughly 70% of nameplate capacity. EPA assumed a ramp-up to thatutilization,basedonhistoricalincreasesinnaturalgasoperations(5%peryear).

5ForinformationonthedifferencesbetweencomplianceplanningunderSection111(d)andthatmorecommonStateImplementationPlanprocess(underSection110),seee.g.http://www.raponline.org/featured-work/tackling-111d-compliance-planning-its-not-a-sip642USC§7411(a)(1)7U.S.EPA,“BackgroundonEstablishingNewSourcePerformanceStandards(NSPS)UndertheCleanAirAct.”(2013)8JMcCabe,“EPAConnect-CleanPowerPlan:PowerPlantComplianceandStateGoals”(Aug4,2015).Onlineathttps://blog.epa.gov/blog/2015/08/clean-power-plan-power-plant-compliance-and-state-goals/

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BuildingBlock3:Increasedelectricitygenerationfromemissions-freerenewableenergyFinally, for Building Block 3, EPA analyzed the demonstrated annual capacity additions foremissions-free renewable energy technologies (utility solar, wind, concentrating solar power,hydropower, and geothermal power) on the national level from 2010 through 2014. EPAconsideredboththeaverageandlargestchangesoverthoseyearsintheinstalledcapacityforeachtechnology, anddetermined average andmaximumdemonstrated additions of renewable energygeneration based on capacity factors from theNational Renewable Energy Laboratory. EPA thenused modeling to determine how much renewable energy installation would happen by 2022withouttheCleanPowerPlan.Generationequaltotheaveragedemonstratedadditionwasaddedtothatmodeled2022amountforeachof2022and2023,andthemaximumdemonstratedadditionwas added for each of the years 2024-2030. Modeling was used again to apportion the newrenewablegenerationforeachyeartothedifferentinterconnects.

Withthe finalBuildingBlocks inhand, theEPAthenappliedthemtohistoricalgenerationandemissionsrates for each interconnect to determine potential emissions rates for each year from 2022 to 2030,starting by reducing future emissions based onBuildingBlock 1. Generation levels in each interconnectfrom coal & oil/gas steam turbine plants and NGCC plants, were then reduced by Building Block 3proportionaltotheamounteachofthosecategorieshistoricallygeneratedelectricityineachinterconnect.Building Block 2 was applied last, reducing generation from coal & oil/gas steam turbine plants andincreasingthegenerationfromNGCCplants.Emissionsratesforeachinterconnectwerethendeterminedforeachyearbasedontheamountsofgenerationandemissionsafterthosesteps,attributingincrementalNGCCgenerationfromBuildingBlock2tothecoal&oil/gassteamturbinecategory,sincethosearewhatisdisplaced.

Havingarrivedatemissionsratesforeachcategoryandeachinterconnect,theEPAtookthehighest(leaststrict)setofratesfromthedifferentinterconnectsandsetthoseasthefinalCO2emissionperformancerategoals thatcanbeexpectedtobemet throughapplicationof theBSERtoelectricitygeneration fromeachsource category. The final performance rate goals in pounds of CO2 per megawatt-hour of electricitygeneratedareshownbelow.

Table III: Nationwide CO2 Emission Performance Rate Goals for Affected Units (lb CO2 / MWh)

Nationwide CO2 Emission Performance Rate Goals for Affected Units (lb CO2/ MWh)

2012 2022 2023 2024 2025 2026 2027 2028 2029 2030

Coal & Oil/Gas Steam Turbine 2,167 1,741 1,681 1,592 1,546 1,500 1,453 1,404 1,355 1,304

Reduction from baseline -- 19.7% 22.4% 26.5% 28.7% 30.8% 32.9% 35.2% 37.5% 39.8%

Natural Gas Comb. Cycle 902 898 877 855 836 817 798 789 779 770


State-by-StateAnalysisAfterdeterminingtheperformancerategoalsfromapplyingtheBSERtoelectricitygenerationfromeachsourcecategory,EPAusedthosegoalsto findtheexpectationforemissions limitationonastate-by-statebasisforeachstatethathadaffectedunits.9Specifically,theEPAlookedathowmuchelectricitygenerationcamefromcoal&oil/gassteamturbinesandNGCCplantsinthebaselineyearof2012ineachstate.Itthencalculatedwhatproportionof thatgenerationwas fromeachsourcecategory ineachstateandwhat theexpectedemissionswouldbeifthoseplantsmettheCO2emissionsperformancerategoalsfromtheBSER.

9TherearethreestatesnotregulatedundertheCleanPowerPlan;AlaskaandHawaiiarenotcoveredduetotheiruniquecircumstancesasnon-contiguousstates,andVermontisnotregulatedbecauseithasnoaffectedunits.Inadditiontotheremaining47states,3otherterritoriesarecovered:theLandsoftheFortMojaveTribe,theLandsoftheNavajoNation,andtheLandsoftheUintahandOurayReservation.

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For example, inWisconsin, 76%of electrical generation fromaffectedunitswas from the coal&oil/gassteamturbinecategoryinthe2012baseline.Therefore,Wisconsin’semissionsrategoalsreflect76%ofthecoal&oil/gassteamturbineperformancerategoalforeachyearand24%oftheNGCCperformancerategoal.

Table IV: Wisconsin CO2 Emission Performance Rate Goals for Affected Units (lb CO2/ MWh)

Wisconsin CO2 Emission Performance Rate Goals for Affected Units (lb CO2/ MWh)

2012 2022 2023 2024 2025 2026 2027 2028 2029 2030

WI Emissions Rate Goal 1,996 1,537 1,486 1,414 1,375 1,335 1,295 1,256 1,216 1,176


Similarly, the final rate goals calculated around the country depended on individual state electricalgenerationportfoliosandrangedfromagoalof771poundsofCO2permegawatt-hourto1,305poundsofCO2permegawatt-hour.Wisconsin’semissionperformancegoalof1,176ishigherthansomeneighboringstatesandlowerthanothers;Wisconsin’srategoalisthe32ndmoststringentoutof50regulatedregions.

Figure 2: Initial Interim and Final Performance Rate Goals for Covered States and Lands (lb/ MWh)

Todetermineatotalemissionsgoalforeachstate(ona“massbasis”),therategoalsforeachyearwerefirstmultipliedbytheaffectedgenerationamountforeachyear.TheEPAthenaccountedforthefactthatnotallachievable renewable energy under Building Block 3 was used in setting the rate goals, since the leaststringent rate across interconnectswas used. In particular, states could see an advantage under a rate-based compliance scenario versus amass-based scenario by increasing renewable energy generation anadditionalamounttoreachthefulldemonstratedpotential. Inamass-basedcomplianceregime,thetotalgenerationallowedforastatewouldonlyincreasebythatadditionalincrementofrenewablegeneration.Using rate-based compliance on the other hand, that renewable generation could effectively be used tooffset a further increase in fossil fuel-basedgeneration fromaffectedunitswhilemeeting the samegoal.Therefore, to level theplaying fieldbetweenmass- and rate-based compliance scenarios,EPA raised themassgoalsforeachstate,makingthemlessstringent,toaccountforthepotentialofeachstatetoincreaserenewableenergygeneration.

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Forexample,underarate-basedscenario,Wisconsinisexpectedtoproduce42.4terawatt-hours(TWh)ofelectricity fromaffectedunits in2022.At theblendedperformance rate goal of 1,537 lbCO2/MWh, thatcorrespondsto32.59milliontonsofCO2emissions.Underamass-basedcomplianceplan,thatlimitwouldbeacaponemissions,unaffectedbyadditionalrenewablegeneration. IfWisconsinwere togenerate theadditional 1.48 TWh of renewable energy that the EPA determined was achievable in 2022 under thatscenario,theendresultwouldbe43.9TWhoftotalgenerationfromaffectedsourcesandnewrenewables.Under a rate-based compliance scenario, the state could instead generate an additional 3.61 TWh fromaffectedsourcesat thestate’sbaselinesteamturbineemissionsrate(2,167lb/MWh), foratotalof47.49TWh,whilestillmeetingtheoverallrategoal.

Step1:CalculateAdditionalMassEmissionsfromAddedGenerationatAffectUnits

1.48 TWh added renewable generation ×0lb

MWh + 3.61 TWh 𝐚𝐝𝐝𝐞𝐝 𝐟𝐨𝐬𝐬𝐢𝐥 𝐟𝐮𝐞𝐥 𝐠𝐞𝐧𝐞𝐫𝐚𝐭𝐢𝐨𝐧×2,167lb

MWh ÷ 2,000lbton

= 3.91 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐭𝐨𝐧𝐬 𝐚𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐂𝐎𝟐 𝐞𝐦𝐢𝐬𝐬𝐢𝐨𝐧𝐬

Step2:CalculateAdjustedEmissionRatewithAddedGenerationatAffectUnits

32.59 million tons CO!emissions + 𝟑.𝟗𝟏 𝐦𝐢𝐥𝐥𝐢𝐨𝐧 𝐭𝐨𝐧𝐬 𝐚𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐂𝐎𝟐𝐞𝐦𝐢𝐬𝐬𝐢𝐨𝐧𝐬42.4 TWh generation + 1.48 TWh added renewable generation + 𝟑.𝟔𝟏 𝐓𝐖𝐡 𝐚𝐝𝐝𝐞𝐝 𝐟𝐨𝐬𝐬𝐢𝐥 𝐟𝐮𝐞𝐥 𝐠𝐞𝐧𝐞𝐫𝐚𝐭𝐢𝐨𝐧 ×2,000

lbton = 1,537

lbMWh

Theadjustment factor thatEPAdeterminedtocompensate for thiseffectwasapplied foreachyear from2022 to 2030, and added to the amount of emissions that could be expected to come from regulatedsourcestoarriveattotalmass-basedemissionsgoals.

Table V: Wisconsin Carbon Dioxide Total Emission Performance Goals

Wisconsin CO2 Total Emission Performance Goals

2012 2022 2023 2024 2025 2026 2027 2028 2029 2030

Additional Potential Renewable Generation (TWh) -- 1.483 1.417 1.452 1.603 1.734 1.772 2.060 2.345 2.596

Emissions Goal (million tons) 42.318 34.871 33.621 32.025 31.351 30.622 29.741 29.207 28.628 27.987 Reduction from baseline -- 17.6% 20.6% 24.3% 25.9% 27.6% 29.7% 31.0% 32.4% 33.9%

MeetingEmissionsGoalsSection111(d)of theCleanAirAct gives individual states a significant role in regulating emissions, andprovides flexibility to states inhow theychoose tocomplywith theCleanPowerPlan.Statesareable todevelopandsubmittheirownplansformeetingtheperformancegoalsthatEPAset.Aslongasthoseplanswillmeetthestate’sgoalsandareequivalenttotheBSERdeterminedbyEPA,theydon’thavetofollowtheBuildingBlocksthatEPAconsidered.Putsimply,theCleanPowerPlandoesnotrequireimplementationoftheBuildingBlocks;instead,astatecouldproposeanyofawidevarietyofplansbuiltonthemeasuresEPAdescribedorothermeasures.Forexample,end-useefficiencywasnotconsideredaspartof theBSERbytheEPA,butisthecheapestenergyresourceandiswidelyexpectedtobeanessentialcomponentofacost-effectivecomplianceplan.

Measuresthatstatescoulduseforcomplianceinclude,butarenotlimitedto:• Efficiency improvements at existing coal power plants • Co-burning natural gas or biomass at existing coal power

plants • Repowering existing coal power plants • Retiring existing coal plants • Re-dispatching electricity generation to more efficient

power plants • Capturing and sequestering carbon emissions at existing

coal or natural gas plants • Increasing use of existing natural gas plants • Efficiency improvements at existing natural gas plants

• Increasing use of combined heat and power systems • Increasing use of nuclear energy • Increasing use of utility-scale renewable energy • Increasing use of distributed renewable energy • Increasing transmission and distribution efficiency • Increasing end-use efficiency • Increasing energy conservation measures • Increasing industrial resource efficiency • Purchasing or trading carbon credits with other states

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GlidePathtoComplianceWhile the BSER analysis conducted by EPA provided emissions reduction estimates for each year from2022to2030,compliancewiththeCleanPowerPlan is fundamentallyrequiredat twopoints: first inaninterimperiodfrom2022to2029,andthenatafinallevelthatstartsin2030.However,onemajorpieceoffeedback EPA received on the proposed rule was that power plants would have trouble meeting theplanned interimgoals thatweremeanttoreduceemissionsandhelpguidethe industryovertimetothe2030finallevels.10OriginallyEPAhadproposedthatstatesmustmeetanoverallaveragelevelofemissionsfor all the years from 2020 to 2029 before the final goals would come into place. In response to thatfeedbackEPAreworkedtheinterimgoalsinthefinalrulebypushingbacktheopeningyearforemissionsgoals twoyears, to2022,andmademultiplestepsdownto the finalgoal:ahighergoalonaverage from2022-2024,aslightreductionthatfrom2025-2027andagainfrom2028-2029,andthenthefinalgoalfrom2030on.However,EPAstill grants states flexibility topropose theirown interimstepgoals aspartof astatecomplianceplan,aslongastheaverageinterimgoaloverthatentiretimeperiodismet.

InWisconsinthisreworkingoftheinterimgoalsmadethestartdatelaterandmadetheinterimgoalslessstrictonaverage than theywere in theproposedrule, sopowerplantswillhaveaneasier timemeetingthem.

Table VI: Interim CO2 Emission Performance Goals for Wisconsin under the Clean Power Plan

Wisconsin Interim CO2 Emission Performance Goals

Proposed Interim

Goal Final Interim Goal - Step 1

Final Interim Goal - Step 2

Final Interim Goal - Step 3

Final Average Interim Goal Change in Avg.

(2020 - 2029) (2022-2024) (2025-2027) (2028-2029) (2022 - 2029) (from Proposed)

Emissions Rate 1,281 lb/MWh 1,479 lb/MWh 1,335 lb/MWh 1,236 lb/MWh 1,364 lb/MWh 6.5% less strict

Total Emissions 32.07 million tons

33.51 million tons

30.57 million tons

28.92 million tons

31.26 million tons 0.9% less strict

Atthesametime,thenewBSERcalculationsresultedinaslightlystricterfinalgoalforWisconsinfromarateperspective,andaslightlylessstrictgoalfromamassperspective:

Table VII: Final CO2 Emission Performance Goals for Wisconsin under the Clean Power Plan

Wisconsin Final CO2 Emission Performance Goals Proposed Final Goal Final Goal Change in Final (2030) (2030) (from Proposed)

Emissions Rate 1,203 lb/MWh 1,176 lb/MWh 2.2% stricter

Total Emissions 27.861 million tons 27.987 million tons 0.45% less strict

CreditforEarlyActionIn addition to establishing interim goals, EPA provided a further incentive to help states come intocompliancewiththeCleanPowerPlanbyprovidingsupplementarycredittowardastate’sinterimgoalsforearly action taken. Specifically, EPA established a voluntary Clean Energy Incentive Program (CEIP) toprovide states with additional Emissions Reductions Credits (ERCs) that can be used toward state goalcompliance for qualifying wind or solar energy projects and energy efficiency projects for low-incomecommunities.Projectsthatqualifyarethosethatbeginconstruction(inthecaseofrenewableenergy)oroperations(inthecaseoflow-incomeenergyefficiency)afterastatesubmitsafinalcomplianceplan,11and

10See,e.g.,U.S.EPA“FACTSHEET:CleanPowerPlanKeyChangesandImprovements”(2015).Onlineathttp://www.epa.gov/cleanpowerplan/fact-sheet-clean-power-plan-key-changes-and-improvements11ProjectscanalsoqualifyafteraFederalPlangoesintoeffectforthosestatesthatdonotsubmittheirowncomplianceplanbythe2018extensiondeadline(9/6/2018).

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generateorsaveelectricityinthetwoyearspriortowhenthefirstinterimgoaltakeseffect(soin2020or2021).Statesareallowedtoprovide0.5MWhofERCsperMWhgeneratedbyrenewableenergyprojects,which is thenmatched by an additional 0.5 MWh by the EPA (1 MWh total of credit for eachMWh ofrenewableenergygenerated).Forenergyefficiency,statesareallowedtoprovide1MWhofERCsperMWhsaved,whichismatchedbyanother1MWhofERCsfromtheEPA,thusprovidinganaddedincentiveforthosekindsofprojects(2MWhtotalofcredit foreachMWhsaved).OtherrenewableenergyandenergyefficiencyprojectsnottakingpartintheCleanEnergyIncentiveProgrambutstartedafterthebaselineyearof2012will count towardcompliance to theextent that they reduceemissionsduring complianceyears(2022andlater).

WISCONSIN’SGOALSEPAset the carbonemissionsgoals forpowerplantsbyapplying theBSER toeach state.However, eachstate is allowed to separately decide the best way to meet those limits if desired. To give states moreflexibility,EPAalsogaveeachstateachoiceoftwodifferentoptionsforwhatkindofgoaltoset.Theycanchooseeithera “rate” target that ispoundsofpollutionpermegawatt-hourofelectricitygenerated,ora“mass” target that is total tons of pollution per year for the state no matter how much electricity isproduced.

Under a rate target,Wisconsinwould be required to reduce carbon emissions from affected sources by26%onaverageforthefirst interimcomplianceperiod(2022-2024)ascomparedtothebaselineyearof2012 (see Table VI). The state would then have to continue making improvements to get to a 41%reductionfromthe2012baselineby2030.Underatotalmasstarget,Wisconsin’sreductiongoalsare21%bythefirstcomplianceperiod,and34%by2030(seeTableVII).

Fortunately, historical energy choices in Wisconsin have positioned the state well to meet the carbonpollutionlimitswhilestillprovidingreliableandaffordableenergy.Infact,powerplantsinWisconsinarealreadyonapathofreducedcarbonemissions,withemissionsdownbymorethan10%between2005and2012 according to data from the U.S. Energy Information Administration.12Amore detailed look at thetrend in carbon emissions from fossil fuel generators thatwould qualify for regulation under the CleanPowerPlanshowsasimilarstory;in2005,therewere46generatorsthatwouldhavebeenregulatedunderthis rule if it had been in place then. Those generators together amounted to 50 million tons of CO2emissions at a combined emissions rate of 2,293 pounds perMWh. In 2012, there were 50 generatorsregulated under the Clean Power Plan, but total emissions from those generators were down to 42.3million tons of CO2 (at 1,996 pounds per MWh).13That amounts to a reduction of over 15% of totalemissions, andabout13% in theemissions rate,between2005and2012,puttingWisconsinon track tomeettheCleanPowerPlangoalsifthattrendweretocontinue.

Fortunately, historical energy choices in Wisconsin have positioned the state well to meet the carbon pollution limits while still providing reliable and affordable energy.

12U.S.EnergyInformationAdministration,StateElectricityProfiles,Wisconsin,“Table7.Electricpowerindustryemissionsestimates,1990-2013”(2015).Onlineathttps://www.eia.gov/electricity/state/wisconsin/13U.S.EnvironmentalProtectionAgency,Emissions&GenerationResourceIntegratedDatabase(eGRID).Onlineathttp://www.epa.gov/energy/egrid

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Figure 3: Historical Trends in Emissions from the Electric Power Industry in Wisconsin, and Affected Units and Affected Unit Goals in Wisconsin under the Clean Power Plan

An independent analysis in December 2013 by theWorld Resources Institute estimated thatWisconsincouldreduceitsCO2emissionsfromexistingpowerplants43%from2011levelsby2020throughmodestincreases incleanenergyinvestments,dispatchingcleaner,moreefficientpowerplants inWisconsinandexpandingthestate’sFocusonEnergyprogram.14ThosestepswouldputWisconsinincompliancewiththefinal 2030 limits 10 years early, two years before even the interim limits of the Clean Power Plan takeeffect.

WISCONSIN’SPATHTOSUCCESSEnergyEfficiencyEnergyefficiencyisthesinglecheapestandmostimportantwaytoreducecarbondioxideemissionsfrompowerplants and to cost-effectively complywith theCleanPowerPlan.While energy efficiencywasnotconsideredbyEPAaspartofthefinalBSERthatsetscarbondioxideemissionsgoals,stateshaveflexibilityto include it as akey complianceoption.Energyefficiency can takemany forms, ranging fromadvancedmeasures likehigh-performanceefficientbuildingdesignornew technologies likeLED lighting, to tried-and-truetechniqueslikesimplyaddinginsulation.Nomatterthespecificmeasuretaken,thegoalofenergyefficiency is to use less energywhile receiving the same or better services (e.g. productsmanufactured,well-lit rooms, hot showers and cold beverages) than before. As the cheapest energy resource, it savespeopleandbusinessesmoneywhilereducingthepollutionthatcomesfromburningfossilfuels.

Wisconsin has a long history of using energy efficiency to save electricity with its statewide Focus onEnergy program. Funded through the state’s energy utilities, the program assists more than 70,000Wisconsin residents and businesses per year and has kept millions of pounds of emissions from beingcreated.15It has already helped with measures that save hundreds of millions of dollars each year,andreducedthecostofenergyacrossthestatebymakingtheelectricsystemmorereliableandreducingthe 14WorldResourcesInstitute,PowerSectorOpportunitiesforReducingCarbonDioxideEmissions:Wisconsin.December,2013.15TheCadmusGroup,Inc.“FocusonEnergyCalendarYear2014EvaluationReport.”May2015.

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needformorepowerplantsandtransmissionlines.IncreasingtheamountofenergysavedthroughFocusonEnergyorother similarprogramshas the largestpotential forWisconsin to cost-effectivelymeet therequirementsoftheCleanPowerPlan.Withouttakingfulladvantageofenergyefficiencyfirst,Wisconsinwouldhave to takemuchbigger steps to limit carbonemissions, suchas spendingmuchmore to switchfromburningcoaltoburningnaturalgas.

RenewableEnergyAnotherkeywayWisconsinutilities can reduceCO2emissions isbyusing cleaner, renewable sourcesofelectricitylikewindturbines,solarenergysystems,andbiogasgenerators.Wisconsinhasalargevarietyofrenewable energy resources, with the technical resource potential that could generate hundreds orthousands of times more electricity than currently is used in the state.16Wisconsin utilities have beenexpandingtheiruseofrenewableenergyresourcessincetheywerefirstrequiredtogeneratepowerfromrenewablesourcesin1998,andthestate’sfirstfull-fledgedRenewableElectricityStandardwaspassedinOctober1999, requiring2.2%of electricity sold inWisconsin to come fromrenewable sourcesby2012.That was expanded in 2006 to a goal of roughly 10% of electricity from renewable sources by 2015;overall,Wisconsinutilitiesachieved this in2013, twoyearsearly.17WhileWisconsinwasoneof the firststates in the nation to pass a renewable energy requirement though, the final state standard ofapproximately9.5%18isnowamong the lowest.19Forexample,Colorado requires that30%of electricityprovided by investor-owned utilities come from renewable sources by 2020. This includes Xcel Energy,whichoperates innumerousstates, includingWisconsinandMinnesota, the latterofwhichhasagoalof30%by2025.Californiaalsorecentlyboosteditsstandardto50%renewablesby2030.20

WhileWisconsinhasbuiltlittlerenewableenergygenerationin-statecomparedtootherstates,ithastheresources and ability to get just asmuchpower from renewable energy as peers and otherMidwesternstates.According to theNationalRenewableEnergyLaboratory,Wisconsinhas the technicalpotential togenerate almost 100 times the amount of Wisconsin’s retail electricity sales in 2013 from renewableelectricity alone.21It alsohasover500 companies involved in thewindand solarpower industries,whoemploy nearly 7,000 people, according to a recent study,22which is more than Iowa, the third largestproducer of non-hydroelectric renewable power in the nation after California and Texas. The morerenewableenergygeneratedinthestate,theeasieritwillbeforWisconsintocomplywiththeCleanPowerPlan.

While Wisconsin has built little renewable energy generation in-state compared to other states, it has the resources and ability to get just as much power from renewable energy as peers and other Midwestern states.

16Lopezetal.“U.S.RenewableEnergyTechnicalPotentials:AGIS-BasedAnalysis.”U.S.DepartmentofEnergy,NationalRenewableEnergyLaboratory.TechnicalReportNREL/TP-6A20-51946.July2012.17PublicServiceCommissionofWisconsin,MemorandumJune3,2014,Docket5-GF-243,“2013RenewablePortfolioStandardSummaryReport.”18Ibid.Wisconsin’sRenewableElectricityStandardisbasedonpercentageincreasesoverabaselineyear;asof2014,therequirementwasestimatedtoleadto9.45%ofgenerationcomingfromrenewablesources.19Ofthe35statesand5otherareas(WashingtonDCand4territories)withstandardsorgoalsforthepercentageofgenerationcomingfromrenewablesources(notcountingIowaandTexas,twooftheleadinggeneratorsofrenewableenergy,thathavecapacitystandardsinsteadofgenerationgoals),onlySouthCarolina’sislowerthanWisconsin’sgoalofapproximately9.5%.Fourstateshave10%renewablestandardsorgoal.SeeDSIREprojectofNCCleanEnergyTechnologyCenterandU.S.DepartmentofEnergy,availableonlineathttp://www.dsireusa.org.20Ibid.21Lopezetal.“U.S.RenewableEnergyTechnicalPotentials:AGIS-BasedAnalysis.”U.S.DepartmentofEnergy,NationalRenewableEnergyLaboratory.TechnicalReportNREL/TP-6A20-51946(July2012)22EnvironmentalLawandPolicyCenter.“WisconsinCleanEnergySupplyChain:GoodforManufacturingJobs,GoodforEconomicGrowthandGoodforOurEnvironment”(February,2015)

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CompliancewiththeCleanPowerPlanGiventhegreatflexibilityofSection111(d),thereareawiderangemeasuresWisconsincanusetoreduceCO2emissionsandmeettherequirementsoftheCleanPowerPlan.Thisflexibilityprovidesthestatewithcountless“paths”tocompliance.

Toconsiderthepotential impactoftheCleanPowerPlanonWisconsin,wedevelopedthreeseparatebutincrementalcompliancepaths.Eachstartswithan increase inenergyefficiency inthestate,sinceenergyefficiencyisthemostcost-effectivemeasuretoreduceemissions.Thesecompliancepathsthenexaminethepotential for incremental increases inemissionsreductionsbasedonexistingpolicies,suchasexpandingthe Renewable Electricity Standard, and technologies, such as increasing the use of existing natural gasplantsandusingexistingcoalplantsmoreefficiently.

PathA:MinimumCompliance

This path considers minimum steps that could be taken using existing policies and technologies inWisconsintocomeintocompliancewiththeCleanPowerPlan.ItassumesadoublingofsavingsfromtheFocusonEnergyprogramwhileholdingconstantachievementfromotherenergyefficiencyefforts.Italsoincludesanincrementalincreaseof1.05timesmorerenewableenergygenerationperyearthentheyearbefore;an increase innaturalgasgeneration toanoverall50%net summercapacity;anda1.5%improvementintheemissionsperformanceofthestatecoalfleet.

PathB:ModerateReductions

ThispathassumesslightlylargerstepsthatcouldbetakenusingthesamepoliciesandtechnologiesastheMinimumCompliancePath(A).Itiscomprisedof:

• Adoublingofsavingsfromallenergyefficiencyeffortsinthestate;• Gradualincreaseinrenewableenergygenerationto20%ofretailsalesby2030;• Increaseinnaturalgasgenerationtoanoverall55%netsummercapacity;and• 4%increaseintheemissionsperformanceofthestatecoalfleet.

PathC:EasilyAchievableSavings

TheEasilyAchievableSavingsPath(C)demonstrateswhattheimpactswouldbeifWisconsinfollowedthe lead of other states, but appliedwith regard to current policies and technologies in the state. Itassumes:

• Asavingsgoalof2.5%peryearfromenergyefficiencyeffortsintheWisconsin;• Gradualincreaseinrenewableenergygenerationto30%ofretailsalesby2030• Increase in natural gas generation to an overall 60% net summer capacity along with an

increaseinco-firingto5%ofoverallgenerationfromcoalfacilities;and• A5%increaseintheemissionsperformanceofthestatecoalfleet.

Our compliance paths were not intended to be an exhaustive consideration of potential emission-reductionmeasures,butinsteadprovideinformationontheimpactsofaspecificsubsetofactionsthatcouldbe taken to reducecarbonemissions. Inaddition, thesepathswerenotmeant to show the fullrangeofpollutionreductionspossiblebasedonthemeasuresconsidered,butrepresentconservativeapproachestopotentialpollution-reductionmeasures;eventhestrongestpath(theEasilyAchievableSavingsPathC)wasdesigned to takeonlymodest steps towardemissions reduction.Forexample, a2.5%savings fromenergyefficiency is thesameasArizona’senergyefficiencygoal,but less thanthegoalsofMassachusettsorRhodeIsland(2.6%).Similarly,25%renewableenergyby2030islessthanmanyotherstates, includingNewYork(30%by2015);Colorado(30%by2025);California(50%by2030);andVermont(75%by2032).23

23See,e.g.,DSIREprojectofNCCleanEnergyTechnologyCenterandU.S.DepartmentofEnergy,availableonlineathttp://www.dsireusa.org.

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Table VIII: Analyzed Clean Power Plan Compliance Paths for Wisconsin

Analyzed Clean Power Plan Compliance Paths for Wisconsin

Path A: Minimum Compliance

Path B: Moderate Reductions

Path C: Easily Achievable Savings

Description

ThispathtakesthefeweststepsneededtocutcarbonandstillmeetthelimitsoftheCleanPowerPlan.

Thispathtakeslarger,butstillrelativelysmallstepstocutcarboninWisconsin.

ThispathlooksatthepotentialimpactofstepsthatotherstateshavetakenwhenappliedtoexistingpoliciesandinfrastructureinWisconsin.

EnergyEfficiency

DoubleFocusonEnergyProgramto1.8%savingsfromefficiencyperyear

Doublestatewideefficiencysavingsto2.04%peryear

Increasecustomer-sideenergyefficiencyto2.5%peryear

RenewableEnergy

Increaserenewableenergygenerationbyfactorof1.05/year

Doublerenewableenergygenerationto20%ofsalesby2030

Increaserenewableenergygenerationto25%by2030

UseofExistingGasPlants

Useexistinggasplantsmore(50%ofsummercapacity)

Useexistinggasplantsmore(55%ofsummercapacity)

Useexistinggasplantsmore(60%ofsummercapacity);co-fire5%naturalgasatexistingcoalplants

UseofExistingCoalPlants

Operatecoalfleetmoreefficiently(by1.5%)

Operatecoalfleetmoreefficiently(by4%) Operatecoalfleetmoreefficiently(by5%)

The increase in theuseofexistinggasplantswasalsoconservative.While theBSERdeterminedbyEPAincludes increasing the use of existing natural gas plants to 70%of net summer capacity, the pathwaysconsideredhererangefromusing50%to60%(withasmallamountofco-firing)ofnaturalgascapacityinthestate.Thesearerelativelysmallincreasesfromthe2012baseline,whenthoseplantsalreadyoperatedatanoverallcapacityfactorof45%.Finally,theoverallincreasesincoalfleetefficiencyrangingfrom1.5%to 5% are similarly unambitious:Wisconsin’s coal fleet already operated 2.6%more efficiently in 2014thanthe2012baseline intermsofcarbondioxideemissionsperMWh,andthroughSeptember2015thefleetwasoperating2.65%moreefficiently,mainlyduetodecreasedgenerationfromlowerefficiencyunitsandanincreasedgenerationfromthosewithloweremissionsrates.24

Despitetheconservativenatureofthecompliancepaths,eachonedemonstratesawayinwhichWisconsincanmeet the requirements of theCleanPowerPlan.Thepotential emissions reductions associatedwiththese compliance pathways was calculated using a step-by-step process, based on data from EPA, U.S.Energy Information Administration, Wisconsin Public Service Commission, and Wisconsin’s Focus onEnergyprogram.25WhiletheCleanPowerPlanrequiresthatWisconsinproduce14.3millionfewertonsofCO2than2012fromaffectedunitsby2030(resultinginanoveralllimitof28milliontonsofCO2emissionsallowedannually),theMinimumCompliancePath(A)wouldresultina15.1milliontonreduction(or27.2milliontonsoftotalremainingemissionsannually).Theothercompliancepathsanalyzedeachresultedinfurtheremissions reductions commensuratewith the increases inmeasures taken:ModerateReductionsPathBwouldresultinatotalof22.6milliontonsofemissionsannually,andEasilyAchievableSavingsPathCwouldresultin16.2milliontons.

24Baseline2012FossilSteamemissions:2,362lb/MWh;2014:2,300lb/MWhfromEPAAirMarketsProgramDataandformEIA-923;2015Jan-Sep:2,299fromEPAAirMarketsProgramDataandformEIA-92325SeeAppendixAforemissionscalculationdetails

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Figure 4: Emissions Reductions Steps, Achievement and Remaining Total Emissions in Wisconsin from Minimum Compliance Path A (millions of tons CO2)

Figure 5: Emissions Reductions Steps, Achievement and Remaining Total Emissions in Wisconsin from Moderate Reductions Path B (millions of tons CO2)

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Figure 6: Emissions Reductions Steps, Achievement, and Remaining Total Emissions in Wisconsin from Easily Achievable Savings Path C (millions of tons CO2)

Figure 7: Comparison of Emissions Reductions and Remaining Total Emissions in Wisconsin from Clean Power Plan Compliance Paths A, B, C (millions of tons CO2)

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Inconjunctionwiththeemissionsreductionsachievedbyeachpath,aneconomicanalysiswasconductedthatconsideredthepotentialcostoffollowingeachcompliancepath.Thatanalysisconsideredthepotentialcosts associatedwitheachemissions-reductionmeasure, alongwithpotential cost savings fromreducedfueluseandthesalesofemissionscredits.Eachpathwasfoundtorepresentacost-effectiveoptiontomeetelectricity demands while reducing emissions in Wisconsin. 26 In fact, the analysis shows followingMinimumCompliancePathAorModerateReductionsPathBwouldcostthestatelessmoneycomparedtodoingnothingatall(thatis,notcomplyingwiththeCleanPowerPlan),savingWisconsin$55.4millionor$11.3millionperyear, respectively.The largeremissions reductionsofEasilyAchievableSavingsPathCwouldamounttoa1.25%increaseintotalcostsby2030.

Table IX: Estimated Costs of Paths A, B, C for Compliance with the Clean Power Plan in Wisconsin

Costs of Compliance with the Clean Power Plan in Wisconsin

Path A: Minimum

Compliance Path B: Moderate

Reductions Path C: Easily Achievable

Savings

Increase in Energy Efficiency $117.6 million $140.9 million $160.5 million

Increase in Renewable Energy $227.6 million $305.6 million $437.5 million

Increased Use of Natural Gas $145.8 million $233.7 million $390.6 million

Reduced Fuel Use and Emissions Credits -$546.3 million -$691.6 million -$893.3 million

Net Costs -$55.4 million -$11.3 million $95.3 million

As percent of total estimated costs -0.73% -0.15% 1.25%

In addition to showing that a path based on energy efficiency is easy and cost-effective, our analysisrevealed howmuchmore difficult it would be to limitWisconsin’s carbon pollutionwithout relying onefficiency.Forexample, compared toMinimumCompliancePathAwhich justmeets therequirementsoftheCleanPowerPlan,apathwithoutincreasedcurrentefficiencyeffortswouldrequiremoreuseofnaturalgasplants(65%ofsummercapacity,insteadof50%)andcostthestate$203.7millionmorethanthestatusquo.(Bycomparison,PathAcosts$55.4millionless).IfWisconsindidn’tuseefficiencyatall,itwouldneedto use more renewable energy (20% by 2030), in addition to even more natural gas (70% summercapacity) to comply and at an added cost of $304.2 million. Similarly, if the state were to choose acomplianceplanthatreliedontheadditionofnewnuclearpowerplants,thecostsareexpectedtobemuchhigher.Forexample,themostrecentcostestimatetoconstructtwoAP1000reactorsattheVogtleElectricGeneratingPlantinGeorgiais$14billion.27

WHATITMEANSFORWISCONSINHealthinWisconsinClimate change is already affectingWisconsin, with the average temperature up more than a 1 degreeFahrenheit(°F)overthepastcentury,and2.5°FinNorthernWisconsin.28Thestateisalsoseeingearlierspring seasons anddifferentpatternsof rain andwater flow compared to yearspast.Unfortunately, thelatestscientificprojectionsshowevenmorechangesinthefuture,withtemperaturesthatmaybeasmuchas9°Fhigherby2050.29

Theseincreasedtemperatures,andtheextremeweatherpatternsandchangesinprecipitationandwaterlevels thatcomealongwith them,willgreatly impact thehealthandwellbeingofWisconsinites.Someof 26SeeAppendixBforeconomiccalculationdetails27RobPavey,TheAugustaChronicle,"PriceofVogtleexpansioncouldincrease$900million.”.May11,2012.28WisconsinInitiativeonClimateChangeImpacts.“Wisconsin’sChangingClimate:ImpactsandAdaptation.”2011.29Ibid.

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the possible impacts include the spread of disease-carrying pests like ticks andmosquitos,more deadlyheatwaves,moreandworsecasesofbothdroughtsandflooding,andworseairquality.30TheCleanPowerPlanwillhelpto lessensomeofthese impacts inWisconsinbyreducingthegreenhousegasesthatcauseclimatechange.

Inaddition,theCleanPowerPlanwillalsohaveimmediatehealthbenefitsbyreducingtheamountofotherpollutionreleasedintotheairalongsidecarbon,especiallyfromcoalpowerplants,includingsulfurdioxide,nitrogenoxides,andparticulatematter.Thesepollutantsandthesecondarypollutantstheycancreate intheair, suchas fineparticulatematter andozone (theprimary constituentof smog), are responsible forhundreds of premature deaths in the state each year.31They also cause health problems that severelyimpactwellbeinginthestate.Forexample,morethanonein10adultsandchildreninWisconsinhasbeendiagnosedwithasthma,withmoreidentifiedeachyear.32Airpollutionlikeozonemakesasthmaproblemsworse and contributes to the asthma attacks and problems that reduce the quality of life for theseresidents,aswellasthenearly20,000emergencydepartmentvisits inWisconsinrelatedtoasthmaeachyear.33

ElectricityBillsinWisconsinInadditiontothehealthbenefitsoftheCleanPowerPlan,properlyplannedcompliancepathwayshavethepotentialtosavemoneyforWisconsinfamiliesandbusinesses.Thisisbecausethebestandeasiestwaytocutcarbonemissionsistoreducetheamountofelectricityusedinthestate,whetherbyusinglessenergythroughenergyconservationmeasuresliketurningofflights,orthroughawiderangeofenergyefficiencypractices,suchasreplacingoldlightbulbswithmoreefficientones.TheEPA’smodelingshowsthatwhilethechangesneededinhowelectricityisgeneratedmaycauseanincreaseinaverageWisconsinelectricitypricesby2030,reductionsintotalelectricityusewillresultinanet5%reductionintotalelectricitycostsannuallyinthestatebythetimethefinallimitsareinplacein2030.OuranalysissimilarlyshowedsavingsforPathsAandB,withasmallnetcostforPathC.

Wisconsin’sEconomyBeyond thehealthandwelfarebenefits, theCleanPowerPlan canhavevery clearanddirectbenefits toWisconsin’seconomy.Everyyear,thestatesendsover$14billionoutofstatetoimportfossilfuels.34Thisincludesover$1billionspenttoimport25milliontonsofcoalannually.35TheCleanPowerPlanwillhelpusmovedownapathtocutthatspendingandkeepthoseenergydollarsflowinginWisconsininstead.Inaddition, energy efficiency not only savesmoney on the energy bills of families and businesses, a 2013studyfoundthattheFocusonEnergyprogramenhancedtheoverallstateeconomybyover$7forevery$1invested in 2012.36Similarly, theUnion of Concerned Scientists projected that an increase in renewableenergy generation to 25%by2025would addmore than2,500 jobs in the state.37Far fromdragging itdown,Wisconsin’seconomycouldbeboostedbytherightcompliancepathfortheCleanPowerPlan.

Far from dragging it down, Wisconsin’s economy could be boosted by the right compliance path for the Clean Power Plan.

30Ibid.31FCaiazzoetal.,AtmosphericEnvironment,“AirpollutionandearlydeathsintheUnitedStates.PartI:Quantifyingtheimpactofmajorsectorsin2005.79(2013)198-208.32WisconsinDepartmentofHealthServices,DivisionofPublicHealth,BureauofEnvironmentalandOccupationalHealth.“TheBurdenofAsthmainWisconsin2013.”P-45055-2013(Rev05/2013).33Ibid.34Basedonanaverageofmostrecentfiveyearswithavailabledata(2008-2012)fromWisconsinStateEnergyOffice.“2013WisconsinEnergyStatisticsBook.”2013.35Ibid.36TheCadmusGroup,Inc.“FocusonEnergyCalendarYear2012EconomicImpactsReport.”November,2013.37UnionofConcernedScientists.“RaisingtheBarinWisconsin.”2010.

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THEPATHAHEADTheCleanPowerPlanwas finalizedonAugust3,2015; itwas thenpublished in theFederalRegisteronOctober 23, starting a 60-day period in which it could be legally challenged. As of December 2015, 27states38andanumberofindustryandotherspecialinteresttradegroupshavechallengedtheregulationinlawsuits that have been consolidated into a single case.39Eighteen states and many other interests,includingenvironmentalgroups,havefiledmotionsinsupportofEPA,meaningthatonlyfivestatesarenotinvolved in the legalproceedings thatwillberuledonbya three-judgepanelat theD.C.CircuitCourtofAppeals.

UnlessastayisgrantedbytheCourtwhileconsideringthecasehowever,theCleanPowerPlanwillremainineffectunderatimelinethatprovidesstatesuntilSeptember6,2016tosubmitinitialcomplianceplanstoEPA.WhilestatesalsohavetheoptiontoasktheEPAforatwo-yearextensionto2018ifafewcriteriaaremet, this timeline is such that statesonboth sidesof the legaldebatehave recognized theneed to startplanningsoonerratherthanlater.ManyalsoappreciatethattheadditionalcreditforearlyactionundertheCleanEnergyIncentiveProgram(CEIP)onlyappliestomeasuresbegunafterstateshavesubmittedafinalcomplianceplan,andthattherearealimitednumberofcreditsavailabletoallstatesthroughtheCEIP,onafirst-comefirst-servedbasis.Thisresultsinacleara“first-mover”advantage,andasaresult,manystateshave begun stakeholder processes that will help in drafting compliance plans even while activelyparticipatinginlegalaction.

Even more importantly, as this analysis shows, different compliance pathways will have significantlydifferent costs. There are many forms of energy efficiency programs that could be used by states forcompliancethatwouldhavetheeffectofreducingthecostoftheplanforratepayers.Thedetailsofwhatitwilltakeforastatetoget“credit”foranyofthoseenergyefficiencyprogramsunderrate-ormass-basedapproaches are not simple andwill certainly take significant time and stakeholder engagement toworkthrough.

States that do not submit initial or final plans in 2016 will be subject to a federal compliance plandevelopedbyEPA.IftheCleanPowerPlanstaysinplaceasitiswritten,affectedelectricalgenerationunitswillhavetostartreducingemissionstowardtheinterimcompliancegoalsby2022,andmeetthefinalgoalsby2030.StateswillberequiredtoreporttoanddemonstratecompliancebyJuly1,2025;July1,2028;andeverytwoyearsthereafter.

38Alabama,Arizona,Arkansas,Colorado,Florida,Georgia,Indiana,Kansas,Kentucky,Louisiana,Michigan,Mississippi,Missouri,Montana,Nebraska,NewJersey,NorthCarolina,NorthDakota,Ohio,Oklahoma,SouthCarolina,SouthDakota,Texas,Utah,WestVirginia,WisconsinandWyoming.39AChilders,BloombergBNA,“PastAdministratorsJoinEPAinPowerPlantLawsuit.”December4,2015.Onlineathttp://www.bna.com/past-administrators-join-n57982064344/;E&EPublishing,LLC,E&EPowerPlanHub,“LegalChallenges--Overview&Documents.”Onlineathttp://www.eenews.net/interactive/clean_power_plan/fact_sheets/legal

APPENDIXA:CALCULATIONOFCOMPLIANCEPATHWAYEMISSIONS 0

ThecalculationofemissionsassociatedwitheachproposedcompliancepathwaybeganwiththedatathatEPAusedandprovidedforcalculatingemissionslimitsfromtheCleanPowerPlan(eGRID–Emissions&GenerationResource IntegratedDatabase–2012data).EPA’sestimatedelectricitydemand inWisconsin(42.4TWh in2020, increasing to44.25TWhby2030),wasassumed tobemetby somecombinationofgenerationandefficiency.Specifically, thestepsofeachcompliancepathwereappliedtothe2012inthefollowingorder:

1. AdjustforPlannedRetirementandRepowering2012 eGRID data was updated to reflect coal plant retirement or repowering projects that have beenannounced to date by utilities. Retired plants were assumed to contribute no generation or emissions;repoweredplantswereassumedtoreflectthesystem-averageNGCCemissionsratesandcapacityfactorsofothernaturalgasplants(seeStep4).

Table A.I: Net Summer Capacity (MW) of Wisconsin Generation Facilities

Baseline (2012) After Announced Retirements & Repowering

Coal 8,046.0 MW 6,562.0 MW

Natural Gas Combined Cycle 2,618.2 MW 2,957.1 MW

Other 100.1 MW 100.1 MW

Total 10,764.3 MW 9,619.2 MW

2. AccountforEnergyEfficiencyTheannualelectricitydemand(e.g.42.4TWhin2020)wasreducedbyenergyefficiencysavings.Annualincrementalelectricitysavingswerecalculatedasapercentageoftotaldemand(2012incrementalEEachievementiscalculatedbyEPAtobe1.02%peryearstatewide;400.77%ofthisisassumedtocomefromFocusonEnergy,41withtheremaining0.25%fromotherefforts).Cumulativesavingswerethencalculatedovertimeformeasuresstartingin2018,whenthefinalcomplianceplanisdue.TheconservativemethodologyemployedbyEPA(assuming10-yearaveragemeasurelifewithlinearreductionovertime;seeFigureA.1)wasused,withcumulativesavingsforeachyearsubtractedfromtheelectricitydemandfortheyear.

a. PathA:1.79%incrementalannualsavings;2.16TWh(5.1%)cumulativesavingsin2020,7.06TWh(16.0%)in2030

b. PathB:2.04%incrementalannualsavings;2.47TWh(5.1%)cumulativesavingsin2020,8.05TWh(18.2%)in2030

c. PathC:2.5%incrementalannualsavings;2.72TWh(6.4%)cumulativesavingsin2020,8.88TWh(20.1%)in2030

40U.S.EnvironmentalProtectionAgency,“TechnicalSupportDocument(TSD)forCarbonPollutionGuidelinesforExistingPowerPlants:EmissionGuidelinesforGreenhouseGasEmissionsfromExistingStationarySources:ElectricUtilityGeneratingUnits.”August3,2015.DocketIDNo.EPA-HQ-OAR-2013-060241AmericanCouncilforanEnergyEfficiencyEconomy.StateandLocalPolicyDatabase,“Wisconsin.”Onlineathttp://database.aceee.org/state/wisconsin

Figure A.1: Example Cumulative Savings from Energy Efficiency (Path A)

3. IncreaseRenewableEnergy

Electricitygeneratedfromrenewableemissions-freesourceswasincreasedfromthebaseline(theamountprovidedbyWisconsinutilitiestomeettheirRPSobligationsin2012;6.05TWh).Althoughnewrenewableenergyfacilities installed in2013oraftercanbeusedtohelpmeettheCleanPowerPlan,aconservativeassumptionwasmadethatnonewouldbeinstalleduntilafterthefinalcomplianceplanisduein2018.Theincrementalincreaseoverthebaselinewasthenassumedtomeetthetotalgenerationneed.Startingin2018,renewableenergyfacilitieswereassumedtobeinstalledeitheratafactorof1.05increaseperyearstartingfromthebaseline(PathA),orto20%ofretailelectricitysalesby2030(PathB)or25%ofretailelectricitysalesby2030(PathC).Totalstateelectricitysaleswereassumedto increaseat therateestimatedbyEPAstartingfrom2012levels(68.8TWh/year),lesscumulativeenergyefficiencysavings.

a. PathwayA:increaserenewableenergybyfactorof1.05peryearfrombaseline(6.05TWh),startingin2018;totalof10.41TWhby2030;10.41–6.05=5.36TWhofnewrenewablegeneration.

b. PathwayB:increaserenewableenergyto20%ofsalesby2030,startingin2018;totalof10.41TWhby2030;10.41–6.05=7.2TWhofnewrenewablegeneration.

c. PathwayC:increaserenewableenergyto25%ofsalesby2030,startingin2018;totalof16.35TWhby2030;16.35–6.05=10.3TWhofnewrenewablegeneration.

Figure A.2: Added Renewable Energy over Time (beyond 2012 baseline of 6.05 TWh)

4. Increase Use of Natural Gas Combined Cycle Plants Natural Gas Combined Cycle plants, including

repoweredcoalplants,wereassumedtorampupproductionto50,55,or60%ofnetsummercapacity(forPathwayA,B,andCrespectively).

Table A.II: Generation from Wisconsin Natural Gas Combined Cycle Facilities

Net Summer Capacity (MW)

Capacity Factor

Annual Generation (GWh)

Baseline (2012) 2,618 45% 10,244 Minimum Compliance Path A 2,957 50% 12,952

Moderate Reductions Path B 2,957 55% 14,247

Easily Achievable Savings Path C 2,957 60% 15,543

EPA Building Block 2 2,618 75% 17,202*

*EPAgoalswerecalculatedusingcapacityandcapacityfactorsataninterconnect,notstate,level

5. IncreaseEfficiencyofRemainingCoalFleetEmissions from the remaining (not retired or repowered) coal fleet were reduced to account for moreefficientoperationofthefleetasawhole(e.g.throughincreaseddispatchofmoreefficientunits).IncreasesinefficiencywereassumedtoresultinreducedaverageCO2emissions/MWhfromcoalplantsof1.5%,4%,and5%forPathsA,B,andCrespectively.Additionally,inPathC,emissionswerefurtherreducedtoreflectan average of 5% generation at coal plants coming from the co-firing natural gas (using fleet averageemissionsfornaturalgasgeneration).The remaining demand after applying the previous steps was allocated to coal generation, therebydeterminingthefinalgenerationmix.

Figure A.3: Example Energy Generation Mix (Path A)

6. CalculateTotalEmissionsTotalemissionsfromgenerationat largefossil fuelplantoperations inthestatewerecalculatedforeachpathway,andcomparedtoEPAgoals.

Figure A.4: Emissions Reductions Steps, Achievement, and Remaining Total Emissions in Wisconsin from Clean Power Plan Compliance Path A (millions of tons CO2)

Figure A.5: Emissions Reductions Steps, Achievement, and Remaining Total Emissions in Wisconsin from Clean Power Plan Compliance Path B (millions of tons CO2)

Figure A.6: Emissions Reductions Steps, Achievement, and Remaining Total Emissions in Wisconsin from Clean Power Plan Compliance Path C (millions of tons CO2)

APPENDIXB:CALCULATIONOFCOMPLIANCEPATHWAYCOSTSThecostsassociatedwitheachproposedcompliancepathwaywerecalculatedonanannualbasisforeachstepasfollows:

1. CoalPlantRetirementorRepoweringThe announced retirement and repower of coal plants has no net cost attributable to the compliancepathways (the announcements were all made prior to, and for different reasons than, the Clean PowerPlan).

2. IncreasingEnergyEfficiencyWhile current efficiency efforts can be used to helpmeet the requirements of Clean Power Plan, thosecurrenteffortshavenocostsattributabletothecompliancepathways(liketheannouncedretirementandrepowerofcoalplantsthoseeffortswereactivepriorto,andfordifferentreasonsthan, theCleanPowerPlan).Theexpenseofincreasedenergyefficiencysavingsaboveandbeyondcurrenteffortswascalculatedassuming similar costs to the current Focus on Energy program. In particular, the incremental costsassociatedwithenergyefficiencyeffortsfromthe2014calendaryearwereused(totalnon-incentivecosts,includingadministrativeanddeliverycosts).42Assumingelectricityandnaturalgascost-benefitratiosweresimilar, costs forFocusonEnergywereproportionallydistributed.Theaddedcosts forenergyefficiencyassociatedwitheachpathwaywerethencalculated:

a. PathA:Additional$117.6millionannuallytodoubleelectricityproportionofFocusonEnergyb. PathB:Additional$140.9million(doublingofelectricityproportionofFocusonEnergy,plus

additional110,625MWhsavedannuallyatsameincrementalcostof$211/MWh)c. PathC:Additional$160.5million(doublingofelectricityproportionofFocusonEnergy,plus

additional203,550MWhsavedannuallyatsameincrementalcostof$211/MWh)

3. IncreasingRenewableEnergyAlthough new renewable energy facilities installed in 2013 or after can be used to helpmeet the CleanPower Plan, generation from renewable energy facilities built in 2012 or before cannot be used forcompliance.Asaresult,andsincetheconservativeassumptionwasmadethatnonewrenewableenergyprojectswould be completed inWisconsin until 2018, unlike for energy efficiency all renewable energygenerationusedinthecompliancepathwayshadanassociatedcost.Thatcostwasassumedtobethesameas the cost of renewable energy secured annually for compliancewithWisconsin’s renewable electricitystandardin2012.43Thisisaconservativeassumption,becauserenewableenergypriceshavebeenrapidlydecreasing,andareprojectedtodecreaseinthefutureparticularlyasmorerenewableenergytechnologyisinstalled in the lead-up to the Clean Power Plan increases economies of scale.44The cost of incrementalMWhofrenewableenergygeneratedannuallyundereachpathwaywasthencalculated.

a. PathA:Additional$227.6milliontoincreasegenerationfromrenewableenergybyfactorof1.05peryear

b. PathB:Additional$305.6milliontoincreasegenerationfromrenewableenergyto20%oftotalretailsalesannuallyby2030

c. PathC:Additional$437.5milliontoincreasegenerationfromrenewableenergyto25%oftotalretailsalesannuallyby2030

42TheCadmusGroup,Inc.“FocusonEnergyCalendarYear2014EvaluationReport.”May2015.43PublicServiceCommissionofWisconsin,“ReportontheRateandRevenueImpactsoftheWisconsinRenewablePortfolioStandard.”July1,2014.Docket5-GF-245.44Indeed,whereasthe2012costassumedhereis$42.48/MWh,thecostspaidon13powerpurchaseagreementsforwindgeneratedinInteriorstatesin2014averagedlessthan$25/MWh(forGreatLakesstates,thecostwasroughly$35/MWh).FromU.S.DepartmentofEnergy,OfficeofEnergyEfficiencyandRenewableEnergy,“2014WindTechnologiesMarketReport.”August2-15.

4. IncreasingNaturalGasGenerationThe increased cost of generation from natural gas was based on EPAmodeled differences in fuel costsbetweennaturalgasandcoal.Inparticular,deliveredfuelcoststoelectricpowersector(in$/MMBtu)wereused, fromtheEPA’smodelingofCleanPowerPlan implementation.Theenergygenerated fromcoal foreach compliancepathwaywasmultipliedby the averageheat rate (inMMBtu/MWh) fromcoalunits in2012thatarenotannouncedtoberetiringorrepowering,andsimilarfornaturalgascombinedcycleunits.Therequired fuel input thusderivedwas thenmultipliedby thedelivered fuelprices,and thedifferencetakenbetweenthattotalcostandacorrespondingcostoffuelforascenariowherenaturalgasusewasnotincreased.

a. PathA:Additional$145.8millioninfuelcoststoincreaseoveralluseofnaturalgascombinedcycleplantsto50%ofnetsummercapacity.

b. PathB:Additional$233.7millioninfuelcoststoincreaseoveralluseofnaturalgascombinedcycleplantsto55%ofnetsummercapacity.

c. PathC:Additional$390.6millioninfuelcoststoincreaseoveralluseofnaturalgascombinedcycleplantsto60%ofnetsummercapacity,plus5%oftotalgenerationatcoalplants(e.g.throughco-firing).

5. IncreasedCoalFleetEfficiency

Itisanticipatedthatthemoreefficientcoalplantswillhaveincreaseddispatchastheamountofgenerationfrom coal plants decreases due to increased energy efficiency, renewable energy, and natural gasgeneration in the future.Additional economic andother factors are also already at play that are furtherexpectedtoresultinamoreefficientdispatchoftheexistingcoalfleet.Thus,itisassumedthattherewillbenoadditionalcosttoincreasedcoalgenerationefficiency.

6. SavingsfromReducedFuelUseandSalesofEmissionsCreditsThe fuel cost savingsassociatedwitheachcompliancepathwerecalculatedby firstdetermining the fuelcostsofa“businessasusual”scenario,whereannouncedretirementsandrepoweringhadtakenplace,butadditionalenergyefficiencyandrenewableenergystepshadnotbeentaken.Theincreasedfuelcostfromincreasednaturalgasgenerationwasthenaddedtothatcostscenario,toarriveatafullhypotheticalcostofgenerationwithoutanyfuelsavingmeasures(energyefficiencyandrenewableenergy).Thesavingsfromreducedfuelusewerecalculatedasthedifferencebetweenthathypotheticalcostandthetotal fuelcostscalculatedwith all steps taken for each compliancepathway.Additionally, to the extent that compliancepathways resulted in excess emissions reductions, those reductionswere valued at the rate of themostrecentlyavailableannualaverageper-toncostsofCO2allowancesintheRegionalGreenhouseGasInitiative(2014).45

a. PathA:$542.6millioninsavedfuelcostsduetoenergyefficiencyandrenewableenergygeneration,$3.7millioninsaleableemissionsreductions

b. PathB:$666.0millioninsavedfuelcostsduetoenergyefficiencyandrenewableenergygeneration,$25.6millioninsaleableemissionsreductions

c. PathC:$837.8millioninsavedfuelcostsduetoenergyefficiencyandrenewableenergygeneration,$55.5millioninsaleableemissionsreductions

45PotomacEconomics,“AnnualReportontheMarketforRGGICO2Allowances:2014.”May2015.