Delegation to Feds: Mississippi Unfairly Targeted by Carbon Dioxide Rule

U.S. Senator Thad Cochran (R-Miss.)

U.S. Senators Thad Cochran, R-Miss., and Roger Wicker, R-Miss., along with U.S. Representatives Bennie Thompson, D-Miss., Gregg Harper, R-Miss., Steven Palazzo, R-Miss., and Trent Kelly, R-Miss., have issued a strongly-worded letter to three federal agencies that asserts the proposed Clean Power Plan goals are prohibitively expensive and unattainable by Mississippi, despite significant investments to improve air quality in the state.

U.S. Senator Roger Wicker

The congressional delegation letter to the Environmental Protection Agency (EPA), the United States Department of Agriculture (USDA), and the White House Office of Management and Budget (OMB) asks that they investigate whether carbon dioxide reduction goals associated with the Clean Power Plan are achievable at a reasonable cost – specifically for the state of Mississippi.

The letter reads in part: “We believe Mississippi has been treated unfairly and disproportionately under the Clean Power Plan compared to the vast majority of states. EPA’s goal is so difficult that Mississippi would have the third largest carbon cost recovery index and the third highest marginal cost of carbon reduction, according to Fitch Ratings Analysis. … Moreover, Mississippi’s energy production could be severely limited by the re-dispatching of generation resources to reflect a 70 percent natural gas combined cycle capacity factor. This requirement, when combined with the unattainable renewable energy and energy efficiency targets, places every coal-fired facility in Mississippi at risk of being prematurely shut down.

“Utilities in Mississippi have made significant investments over the past several years, substantially reducing the state’s carbon intensity, particularly at Grand Gulf and the Kemper facility. These early, strategic investments, which led to Mississippi’s ranking as the 13th best CO2 emission rate in 2012, are not only ignored by EPA but punished under the proposed rule. The rule would force Mississippi to have the 12th lowest (most difficult) goal among the states, even though this goal is much lower than the new source standard and national average.”

The letter concludes, “We encourage a review of the rule as applied to Mississippi. We urge you to ensure that a full, factual investigation has been done to demonstrate that carbon reduction goals are achievable at a reasonable cost.”

Full text of the letter:

Dear Administrator McCarthy, Secretary Vilsack, and Director Donovan:

We are deeply concerned about the White House’s attempt to regulate CO2 emissions from existing power plants without appropriate factual analysis. We believe Mississippi has been treated unfairly and disproportionately under the Clean Power Plan compared to the vast majority of states.

Utilities in Mississippi have made significant investments over the past several years, substantially reducing the state’s carbon intensity, particularly at Grand Gulf and the Kemper facility. These early, strategic investments, which led to Mississippi’s ranking as the 13th best CO2 emission rate in 2012, are not only ignored by EPA but punished under the proposed rule. The rule would force Mississippi to have the 12th lowest (most difficult) goal among the states, even though this goal is much lower than the new source standard and national average.

In fact, EPA’s goal is so difficult that Mississippi would have the third largest carbon cost recovery index and the third highest marginal cost of carbon reduction, according to Fitch Ratings Analysis. Given the state’s low median household income and the percentage of income devoted to electricity costs, it is clear that EPA performed insufficient analysis on the rule’s impact at the state level.

EPA has touted the Clean Power Plan’s flexibility through its four “Building Blocks” used to calculate the state goal. However, the reductions associated with each individual building block are so stringent and aggressive that there is no ability to achieve any of them, discrediting the notion of flexibility.

Moreover, Mississippi’s energy production could be severely limited by the re-dispatching of generation resources to reflect a 70 percent natural gas combined cycle capacity factor. This requirement, when combined with the unattainable renewable energy and energy efficiency targets, places every coal-fired facility in Mississippi at risk of being prematurely shut down. Many of these facilities have installed, or are currently installing, very expensive equipment in response to prior EPA rules. Under the new proposal, these pollution control assets could be stranded, with some possibly never being placed into service.

A rural electric generation and transmission cooperative is one of the utilities in Mississippi that has a coal-fired facility at risk for early retirement. The forced shutdown of this facility could jeopardize taxpayer-backed Rural Utilities Service loans. If Mississippi ratepayers cannot pay the costs of complying with the Clean Power Plan, their entire loan portfolio may be at risk. There is a strong federal interest that exists for rural electrification, and it should not be sacrificed for EPA’s goals.

In closing, we encourage a review of the rule as applied to Mississippi. We urge you to ensure that a full, factual investigation has been done to demonstrate that carbon reduction goals are achievable at a reasonable cost.