What is your reaction to how the EPA’s carbon emissions rule might affect your state? What are some ways your state is already prepared and what might be more challenging?
We are a very heavy manufacturing state…We are a coal dependent state. Last year we had 52 percent of our generation from coal…Coal’s a very important baseload generation power source for us. To have some very steep restrictions come across fossil fuel generation is a concern for us, for our economy and for our payers. So the rule is very wide ranging. I think a lot of people are still trying to find out what it means. There’s a lot of flexibility built in, but that also brings some uncertainty from a regulatory perspective.
What concerns us is the fast timeline for implementation. We can’t do a state plan within a year. With the nature of our legislative and administrative process, even a two-year process if we joined a regional group is not feasible. One thing we’re going to request is that the rule givesome more respect to the state planning processes. Another one that jumps off the top of my head is that the baseline is set too late and states that took early action are not receiving credit for being early adopters.
(If the 2012 baseline stays the same) that’s unfortunate. If it does that then, it rewards states that did not take early action either in energy efficiency or energy generation environmental issues. So what’s the incentive for a state now to be an early adopter for things if you’re just going to get punished for it? There are states that haven’t been early adopters and have seen lower targets.
(On the proposal’s building blocks): I’ve heard concern about utilities on improving the heat rate efficiency. Six percent is a pretty high goal that they don’t think they can get to. The renewable standards, our utilities have that, but we are lumped into a regional program. At least the target they use, they look at peer states. Our peer states have much higher (renewable portfolio standards), which skewed our RPS. Is there respect for a state’s previous authority? That’s going to be a legal question that will be challenged.
(On how long Wisconsin needs to write a plan): We need three years. And we told the EPA that, and I know some other states did too. And (our legislature) meets very often, more than other states. It’s better to do it right than do it fast.
Do you foresee your state having a formal or informal stakeholder process?
We’ve filed comments from last fall, working closely with the Department of Natural Resources. And I meet weekly (with them) and we talk about this rule. We filed some extensive comments last December/November before the rule proposal came out. And then two weeks after the rule came out, we held a stakeholder meeting at the (Public Utilities Commission) jointly with the Department of Natural Resources. We had over 30 folks in attendance from our investor-owned utilities and various interest groups. We walked through the steps that the EPA came through on how they set this (requirement), just to make sure we were on the same page. We’re going to be working with our (regional transmission organization) on modeling.
(Midcontinent Independent System Operator) will do some modeling for us and we’re going do some at the state level too to get the economic impact analysis as well as a reliability impact analysis because that’s very concerning to us.
It’s formal and informal. We see it like a three-legged stool: us, the DNR, and the stakeholders all coming together to work on these comments.
Do you feel your role and responsibilities as a state regulator are evolving? Why or why not?
I think the role of the state is actually changing. I don’t think our role is changing because in the end we’re still economic regulators and we watch for the reliability of the grid and those are the key things we are looking for and it just brings to light what our key roles are keeping rates reasonable and keeping the lights on…It makes it more challenging with a rule like this because it brings more uncertainty.
What are some of the biggest energy issues facing your state?
We’re looking at utilities coming in this fall and some are proposing some changes in rate recovery as a result of distributed generation.
This interview was conducted at the NARUC summer meetings in July 2014. To see Q&As with commissioners from other states, visit our interactive map. For a broader story about how state regulators from around the country are reacting to the EPA’s carbon emissions proposal, click here.
If you’re a commissioner and didn’t get to talk to Morning Consult at the conference, feel free to contactEmily Holden. We’d love to hear from other state officials and stakeholders too.