More than 200 comments have been filed praising or condemning the US Environmental Protection Agency's proposed federal implementation plan to reduce carbon dioxide emissions from existing power generators by 32% by 2030.

To ensure compliance with the Clean Power Plan, a FIP would be imposed on those states that do not submit an approved state implementation plan, for which the deadline is September 6. The FIP could also be considered a "model rule" on which states might base their own implementation plans.

Thursday was the deadline to file comments on the FIP, but not all that have been filed were available online as of Friday afternoon.

The FIP provides "a cost-effective pathway to adopt a trading system supported by EPA" and makes it "easy for states and power plants to use emissions trading," according to an EPA fact sheet.

The plan provides two options on how emissions cuts would be measured. If states choose the "rate-based" method, they would measure the CO2 that their existing generators emit, in tons/MWh generated, according to an EPA fact sheet.

The other option would entail converting the rate-based goal to the tonnage they would be allowed to emit over a time period, known as the "mass-based" method.

The EPA had proposed limiting all states using the FIP to either the rate- or the mass-based option, but many of the stakeholder comments that addressed this issue advised the EPA to include both types of measurement in the FIP, and to allow for trading between rate-based and mass-based states.

"To facilitate the broadest possible market, EPA ... should not foreclose the opportunity to develop methods to allow trading between rate-based and mass-based plans while still achieving compliance objectives," said John Bear, Midcontinent Independent System Operator CEO, in his comment on the rule.

Another common denominator in comments was that any FIP should include a "reliability safety valve," through which a generator needed for reliability could somehow be allowed to operate, even when it has exceeded its emissions allowance.

In a joint statement, the California Independent System Operator, MISO, PJM Interconnection and Southwest Power Pool said they wanted "to ensure ... that a targeted 'Reliability Safety Valve' is available during the plan's implementation to address unforeseen reliability issues that cannot be addressed through normal operation under the [FIP]."

How emissions allowances would be allocated was another point covered by stakeholders, of whom many expressed support for letting each state decide how to distribute them.

For example, John Mitchell, director of the Kansas Department of Health and Environment's Division of Environment, said his organization "believes states should have the flexibility to allocate and distribute allowances according to their own unique needs."

But this approach was not universally supported.

"EPA's Model Trading Rule gives away virtually all the value in a market-based system to polluters -- for free," said Evan Weber, executive director of U.S. Climate Plan, an environmental advocacy group. "This massive transfer of wealth comes directly at the cost of every public interest served by any state government. ... We call on EPA to at least give itself the option of assigning the value of its Model Trading Rule to purposes for public interest, including investments in energy efficiency and clean energy in low-income communities and in just transition for communities recovering from dirty industries as we move toward a clean energy economy."

One issue on which EPA sought guidance was "leakage," which occurs when an old fossil-fueled generator, which is limited by the CPP, is replaced by a new fossil-fueled generator, which does not come under the CPP.

Some stakeholders denied the possibility of leakage occurring.

"Leakage does not exist in today's market," the Public Utility Commission of Ohio said in its comments. "The market already biases efficient [natural gas combined-cycle] units to be dispatched ahead of less efficient NGCC units."

In contrast, others expressed concern about the possibility of leakage.

"[The] proposal offers states two presumptively approval leakage [strategies] ... an output-based set-aside and a renewable energy set-aside," said representatives of Iowa's Department of Natural Resources, Utilities Board and Economic Development Authority.

"The State of Iowa strongly encourages EPA to identify additional presumptively approvable leakage strategies and to provide more detailed descriptions of any required technical demonstrations needed to support the use of alternative leakage strategies."

--Mark Watson, Markham.watson@platts.com
--Edited by Richard Rubin, richard.rubin@platts.com

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