Summary of EPA s Proposed Regulations for the Clean Energy Incentive Program (CEIP)

Transcription

1 Summary of EPA s Proposed Regulatios for the Clea Eergy Icetive Program (CEIP) O Jue 16, 2016, the Evirometal Protectio Agecy (EPA) released a proposed rule for the Clea Eergy Icetive Program (CEIP), part of the Clea Power Pla (CPP). The CEIP is a volutary matchig fud program that states ca use to ecourage early ivestmet i eligible reewable eergy, as well as ivestmets i demad-side eergy efficiecy ad solar projects that are implemeted i low-icome commuities. A state or tribe that chooses to opt-i to the CEIP may allocate early actio emissio allowaces (i states that choose a mass-based pla) or emissio rate credits (ERCs) (i states that choose a rate-based pla) to eligible CEIP projects for the electricity saved or the reewable power produced i 2020 ad Followig a award of early actio allowaces or ERCs by a state or tribe, EPA will provide matchig awards (of allowaces or ERCs) up to a atioal limit equal to 300 millio shorts tos of CO2 emissios. The proposed rule differs from EPA s earlier CEIP proposal i several sigificat ways icludig, but ot limited to: Solar projects servig low-icome commuities would be eligible for double allowaces or ERCs, i additio to demad-side eergy efficiecy projects implemeted i low-icome commuities; Separate reserves of allowaces or ERCs for reewable eergy ad low-icome commuity projects would be created ad states would be prohibited from trasferrig allowaces or ERCs from oe reserve to the other; ad EPA would ot create a ew defiitio, or provide a sigle defiitio of low-icome commuity. Rather, states would have flexibility to choose ad apply existig defiitios used by federal, state, or local govermets. For example, EPA proposes four federal low-icome stadards that would be presumptively approvable if icluded i state plas: New Market Tax Credits; HUD Qualified Cesus Tracts; Departmet of Eergy s Weatherizatio Assistace Program (WAP) Icome Guidelies; ad Federal Poverty Level Guidelies. TAKE ACTION ON THE CEIP EPA is requestig feedback o may critical elemets of the Clea Eergy Icetive Program. This documet is iteded to distill some of the key issues cotaied i the proposed rule ad highlight opportuities for stakeholders to provide feedback. Commets are due o August 29th. For questios about the proposed rule or for additioal iformatio about how to provide feedback, visit EPA s website cleapowerpla/clea-eergy-icetive-program or cotact: Khalil Shahyd at the Natural Resources Defese Coucil, kshahyd@rdc.org; (202) Todd Nedwick at the Natioal Housig Trust, tedwick@htic.org; (202) x128. *This documet is ot meat to be a comprehesive summary of all provisios i EPA s proposed rule for the CEIP. For more iformatio about the CEIP, visit 1

2 Divisio of Matchig Allowaces ad ERCs Betwee RE ad Low- Icome Reserves The matchig pool will be divided evely betwee a Reewable Eergy (RE) reserve ad a Low-Icome Commuity reserve, with 50 percet of the matchig pool (150 millio allowaces, or millio ERCs) made available for eligible CEIP RE projects ad 50 percet of the matchig pool (150 millio allowaces, or millio ERCs) made available for eligible CEIP low-icome commuity projects. Allowaces or ERCs that are desigated for oe reserve may ot be re-desigated for the other reserve, (e.g., allowaces that are reserved for low-icome commuity projects may ot be reallocated to the RE reserve or vice versa). I other words, should oe reserve become fully subscribed, the state would ot be permitted to move matchig allowaces or ERCs from the other reserve. EPA s aalyses do ot support the eed for a reserve for low-icome commuity projects larger tha 150 millio allowaces/187.5 millio ERCs i order to meet demad durig the CEIP period, eve with the two-to-oe award for such projects. EPA seeks commet o all aspects of the proposed 50 percet/50 percet divisio of the 300 millio short to matchig pool ito a reserve for RE projects ad a reserve for low-icome commuity projects. EPA requests iformatio ad data that may support a larger reserve for low-icome commuity projects. EPA is also seekig commet o a alterative apportiomet of the reserves, which would set a floor o the portio of the matchig pool that would be available for RE projects ad low-icome commuity projects ad leave a portio of the matchig pool available to be apportioed at the states discretio. For example, 40 percet of every state s pro rata share could be reserved for RE projects ad 40 percet could be reserved for low-icome commuity projects, with the remaiig 20 percet to be awarded at the state s discretio to ay CEIP-eligible project type. Defiitio of Project for Purposes of the CEIP The proposal for the 50 percet/50 percet apportiomet is based i part upo the EPA s aalysis of the potetial MWh that may be achieved by wid, solar, geothermal, hydropower, ad low-icome EE projects i 2020 ad EPA estimates that eergy savigs from potetially eligible CEIP low-icome demad-side EE projects could reach up to 39 millio MWh i 2020 ad 2021 combied, thus absorbig approximately te percet of the matchig allowaces or ERCs provided by the EPA i the matchig pool. The EPA estimates that geeratio from solar projects implemeted to serve low-icome commuities could reach up to 15 millio MWh i 2020 ad 2021 combied, thus absorbig approximately a additioal five percet of the matchig allowaces or ERCs provided by the EPA i the matchig pool. The EPA is proposig to clarify that the curret term project also ecompasses programs that result i the deploymet of CEIP-eligible solar, wid, geothermal or hydropower geeratig capacity ad the implemetatio of CEIP-eligible EE or solar programs i low-icome commuities (i.e., programs that deploy eligible projects). The term project as it refers to projects eligible uder the CEIP, also refers to programs that implemet such projects. Cosistet with the fial emissios guidelies provisios for ERC issuace, a eligibility applicatio submitted by a project provider uder the CEIP may represet either a idividual EE/RE project or multiple projects implemeted as part of program (i.e., it is ot ecessary for each project implemeted as part of a larger program to submit its ow eligibility applicatio). 2

3 Eligible CEIP Low-Icome Commuity Projects EPA is proposig that states have flexibility to determie the types of demad-side EE projects they may deem eligible for CEIP awards, so log as they are implemeted i commuities that meet the state s approved defiitio(s) for low-icome commuity. States may deem residetial ad commercial projects to be eligible for CEIP awards, as well as trasmissio ad distributio improvemets that reduce electricity cosumptio o the customer side of the meter (such as coservatio voltage reductio). The EPA is proposig to iclude solar projects implemeted to serve low-icome commuities that provide direct electricity bill beefits to low-icome commuity ratepayers as eligible for the two-to-oe matchig award from the reserve established for low-icome EE projects. EPA otes that i some istaces multi-family housig, group homes, shelters or other temporary housig may be cosidered commercial etities for utility billig purposes. Excludig these commercial etities from CEIP could keep these residetial ratepayers from beig eligible uder CEIP. Additioally, EPA s experiece has bee that small busiesses, orgaizatios ad istitutios that work with low-icome residets ofte face similar eergy risks (e.g., large bills, disproportioate eergy spedig, shutoff threats) ad experiece the same barriers (e.g., lack of capital, lack of expertise, split icetives for reters) as the residetial sector. High eergy expeses hamper their ability to provide cliets with eergy, health, educatioal, housig, legal ad other services. Thus, the EPA believes all of these types of EE projects ca be desiged to beefit low-icome commuities ad ratepayers, ad all have the potetial to ecourage ivestmet i demad-side eergy efficiecy projects. For residetial projects, the EPA recommeds that the state cosider projects that adhere to the health ad safety stadards established by the Departmet of Eergy s Weatherizatio Assistace Program or comparable stadards. For commercial EE projects, the EPA recommeds that a state cosider projects that reduce electricity demad i buildigs ad istitutios that provide critical services (e.g., commuity ceters, street lightig, health cliics, etc.) withi or to low-icome commuities ad/or households. For trasmissio ad distributio improvemet projects that reduce eergy cosumptio o the customer side of the meter, the EPA recommeds that a state cosider improvemets that sigificatly reduce cosumer electricity demad withi the boudaries of a low-icome commuity or withi low-icome households. EPA believes that solar techology particularly distributed, rooftop, or commuity solar is particularly well suited amog zero-emittig RE resources to implemetatio i low-icome commuities, as it is relatively affordable compared to other distributed RE techologies, it is already widely available for istallatio, ad the primary barriers to deploymet are ecoomic rather tha techical. Eablig such projects to receive the two-to-oe match would serve the same basic purpose of improvig cost impacts ad expadig compliace opportuities for affected electric geeratig uits uder the Clea Power Pla. EPA requests commets o the iclusio of commercial ad trasmissio ad distributio projects, ad o whether there should be ay restrictios o the types of commercial ad/or trasmissio ad distributio projects that may qualify. The EPA solicits commets o the types of solar techologies ad programs that could be eligible for the low-icome commuity reserve of the matchig pool, ad how states may be able to determie beefits delivered to low-icome commuity ratepayers. EPA also solicits commets o whether wid geeratio, geothermal, or hydropower may provide similar ratepayer beefits to lowicome commuities. EPA is also requestig commets o restrictios or safeguards that may be eeded to esure that projects receivig icetives from the low-icome commuity reserve are limited to those that beefit low-icome commuities. 3

4 Requiremet to Establish a Defiitio of Low-Icome Commuity EPA is proposig that it will either create a ew defiitio or provide a sigle defiitio of low-icome commuity that it will require states to use. Rather, the EPA proposes to provide states with the flexibility to use existig state or federal defiitios that best suit their specific ecoomic ad demographic coditios while esurig that eligible projects ad programs receivig icetives are beefittig low-icome commuities. Local, state or federal defiitios are cosidered existig if they were established prior to the publicatio of the fial Clea Power Pla regulatios o October 23, Routie updates of uderlyig federal or state data do ot costitute a ew defiitio for the purposes of this actio. If a state icludes more tha oe defiitio, it must have clear ad cosistet criteria for applyig the multiple defiitios. For istace, a state may use oe defiitio for oe type of program ad aother defiitio for aother type of program, but it should ot choose betwee the defiitios for a specific program i such a way that would allow for arbitrary iclusio or exclusio of idividual projects. The followig existig federal defiitios are cosidered presumptively approvable: New Market Tax Credits; HUD Qualified Cesus Tracts; Departmet of Eergy s Weatherizatio Assistace Program (WAP) Icome Guidelies; ad Federal Poverty Level Guidelies I establishig requiremets for a defiitio of low-icome commuity, the EPA cosidered several key priciples. Oe priciple is a desire to establish requiremets that are clear ad easy for states to implemet as they develop their plas. The EPA believes that use of existig federal ad state defiitios will provide the most clarity ad ease of implemetatio. Aother priciple for the Agecy is that a state s defiitio should provide trasparecy ad cosistecy for all stakeholders with a iterest i the CEIP, icludig project providers ad commuities that may beefit from implemetatio of CEIP-eligible projects. To further these priciples, the EPA emphasizes that, by establishig clear defiitios for a low-icome commuity i the state pla, a state ca make the process easier to implemet ad more trasparet for all parties. EPA agrees with commeters who supported eablig states to use existig low-icome defiitios, allowig both geographic ad household-based defiitios, allowig flexibility to address rural ad urba areas of each state, ad recogizig the existig public beefit programs beig ru by states ad utilities. EPA states that it is reasoable to eable a state to iclude more tha oe defiitio of low-icome i its state pla, to allow eligibility for a rage of differet types of programs (e.g., housig vs. commercial) ad geographic scale (e.g., household vs. geographic boudary). Requirig a state to use oly oe could exclude projects that would be etirely cosistet with the purposes of the Clea Power Pla. At the state level, defiitios may iclude established utility program defiitios that have public utility commissio (PUC) or state eergy office (SEO) approval, eligibility requiremets for state tax credits or icetives, or qualificatio for state admiistered beefit programs, amog others. At the local level, defiitios may iclude established utility program defiitios admiistered by a muicipality, a public power etity, a rural electric cooperative or other aalogous utility provider ot subject to state oversight. As a state cotemplates possible defiitios of lowicome commuity it may be appropriate to cosider the rage of factors specific to the state that impact the eergy burde o low icome ratepayers (e.g., disparities i media icome across the state, utility prices, EJ cocers, or state media icome i compariso with atioal media icome). This ca help states select a defiitio that maximizes iclusio of commuities ad households i which there are sigificat eergy burdes ad barriers to eergy efficiecy programs. EPA is requestig further commet o cocers expressed by stakeholders about the appropriateess of usig state-based defiitios ad potetial remedies to address those cocers. Specifically, some commeters stated that some state-specific defiitios may either exclude some low-icome electricity cosumers or be overly iclusive of highericome households or istitutios that do ot serve low-icome residets. EPA requests commets o the suitability for a federal pla of the existig federal defiitios listed (specifically: NMTC, HUD Qualified Cesus Tracts, WAP, ad the FPLG), as well as ay existig state or local defiitios for programs i that state. The EPA is requestig commet o other federal level defiitios that could be icluded as presumptively approvable. 4

5 Defiitio of Commece Commercial Operatios for Purposes of CEIP- Eligible RE Projects EPA is proposig to replace the term commece costructio for CEIP-eligible RE projects with the term commece commercial operatio, i.e. whe electricity is available for sale or to geerate electricity that receives fiacial credit through et meterig or equivalet policies. EPA is proposig to revise the date for eligible CEIP RE projects (icludig those implemeted i low-icome commuities) to commece commercial operatio to Jauary 1, Accordig to EPA, the chage is ecessary because Commece costructio could be uderstood to ecompass such activities as eterig ito cotracts for eligible RE projects. If this were the Agecy s itet, the the effect would be to reder may RE projects ieligible as a result of early project developmet activities that may have occurred prior to the start date of eligibility. I the case of RE projects lookig to become eligible CEIP projects, the date of Jauary 1, 2020 for eligibility for projects that have commeced commercial operatios reflects the iitial itet of the timig fialized i the Clea Power Pla regulatios. the eligible CEIP low-icome commuity demad-side EE project s electricity savigs begi ad are measureable is the date whe the project commeced operatio for the purpose of CEIP eligibility. The EPA states that the proposal to o loger use the date of fial state pla submittal as a potetial eligibility start-date would remove a source of ucertaity give the Supreme Court s stay of the Clea Power Pla. EPA agrees that while eergy efficiecy programs ca be deployed quickly, adequate ramp-up time must be allowed to thoughtfully desig ad target programs, ad to achieve desired levels of volume. The additioal time eeded for adequate desig ad targetig of eligible CEIP low-icome commuity demad-side EE projects is reflected i the eligibility date of September 6, REQUEST FOR COMMENT: EPA seeks commet o whether the ew proposed approach described, the approach icluded i the fial Clea Power Pla regulatios, or a combiatio of the two approaches, would best serve the goals of the CEIP. REQUEST FOR COMMENT: EPA seeks commet o whether the ew proposed approach described, the approach icluded i the fial Clea Power Pla regulatios, or a combiatio of the two approaches, would best serve the goals of the CEIP. Defiitio of Commece Operatios for Purposes of CEIP-Eligible Demad- Side EE Projects The date of eligibility is o loger tied to the state s submittal of its CPP pla. CEIP-eligible low-icome demad-side EE projects must commece operatio o or after September 6, EPA is proposig that the term commece operatios be defied as the date that a CEIP-eligible low-icome commuity demad-side EE project is deliverig quatifiable ad verifiable electricity savigs, i.e. whe 5

6 Methodology to Determie State s Pro Rata Share of Matchig Allowaces or ERCs The 300 millio to matchig pool will be apportioed amog states based o the amout of reductios from 2012 levels the affected EGUs i the state are required to achieve relative to those i other participatig states. Uchaged from EPA s pre-proposal. Accordig to EPA, the majority of commeters felt that the pro-rata distributio method idetified i the fial Clea Power Pla regulatios, whereby each state s share is based o the amout of reductios from 2012 levels the affected EGUs i the state are required to achieve relative to those i the other CEIP-participatig states (80 FR 64830; October 23, 2015), was the appropriate apportiomet method. Provisios for Reapportioig Matchig Allowaces ad ERCs amog CEIP-Participatig States EPA is ot icludig reapportiomet provisios i the CEIP. I lieu of reapportioig matchig allowaces or matchig ERCs that are ot claimed by a state that chooses ot to opt-i to the CEIP, the EPA would simply retire these uclaimed matchig allowaces with all other uused credits o Jauary 1, Stakeholders ad the EPA expressed cocers about reapportiomet of allowaces ad ERCs amog states. Accordig to EPA, ucertaity aroud whe EPA would kow that additioal matchig allowaces or ERCs are available for reapportiomet ad whether a later reapportiomet would be capable of addressig remaiig umet-demad for eligible CEIP projects makes reapportiomet amog states iappropriate. Accordig to EPA, reapportiomet of matchig allowaces/ercs may also ifluece a state s decisio to opt-i to the CEIP, based o cosideratios that eighborig states could receive additioal matchig allowaces/ercs if the state chooses ot to opt-i to the program, creatig a perverse icetive for a state to opt-i to the program i a effort to shield their origial share of the matchig pool from reapportiomet, but ot follow through o program implemetatio. EPA expects that most states will opt to take advatage of the beefits provided by the CEIP, ad therefore as such, do ot expect a large pool of remaiig matchig allowaces or ERCs would be available for reapportiomet. The EPA requests commet o whether to iclude reapportiomet provisios, ad the methodology that should be used for reapportioig matchig allowaces or ERCs. CEIP Participatio for States, Tribes, ad Territories for which the EPA has ot Established Goals EPA clarifies that a eligible project that is located i Idia coutry withi the borders of a state, solely for the purposes of the CEIP, is cosidered to be located i the state, i order to facilitate such projects eligibility to volutarily seek early actio allowaces or early actio ERCs uder the CEIP. Eligible projects developed i cotiguous U.S. states without affected EGUs may apply for ad receive early actio allowaces or ERCs from aother state that has chose to participate i the CEIP. Projects i o-cotiguous jurisdictios are ot coected to the cotiguous U.S. electrical grid ad caot be said to be located i or beefit a CEIP state, ad are thus ieligible to geerate either ERCs or early actio ERCs or early actio allowaces uder the fial Rule ad this proposal. Developers of eligible RE ad low-icome commuity projects may receive early actio allowaces or ERCs from aother state, so log as the project beefits the state providig the award ad that state has submitted a fial pla that icludes requiremets establishig its participatio i the CEIP. EPA proposes that beefit a state meas that electricity is geerated or saved by a eligible CEIP project located i the CEIP-participatig State (or located i Idia coutry withi the CEIP-participatig State s borders), or that the electricity is geerated or saved with the itetio to meet or reduce electricity demad i the CEIP participatig State. EPA aticipates makig available CEIP participatio for o-cotiguous jurisdictios with affected EGUs whe the 6

7 Agecy fializes emissio guidelies for fossil-fuel fired EGUs i these states ad territories. The EPA aticipates that matchig allowaces or ERCs for ocotiguous states ad territories would be apportioed from the existig matchig pool of 300 millio short tos of CO2 emissios. Therefore, the total amout of CEIP matchig allowaces or ERCs apportioed amog the rest of the states would be reduced accordigly by a small percetage, likely o more tha 5 percet. The EPA is takig commet o how to determie the appropriate portio of the matchig pool that should be apportioed to the o-cotiguous states ad territories, if they choose to participate i the CEIP. ABOUT THE ENERGY EFFICIENCY FOR ALL PROJECT The missio of the Eergy Efficiecy for All (EEFA) project is to brig together the eergy ad housig sectors to tap the beefits of eergy efficiecy for millios of Americas livig o limited icomes. We work with a rage of parters i 12 states to promote effective utility eergy efficiecy programs for affordable buildig owers ad healthy ad affordable housig for residets. We bled expertise i affordable housig, eergy efficiecy, buildig owership, ad utility egagemet. We work to support local groups by providig tools ad resources that ca help them icrease eergy efficiecy opportuities for uderserved teats i their states. Joh Wilso Joh@ef.org (415) Todd Nedwick tedwick@htic.org (202) x128 Khalil Shahyd kshahyd@rdc.org (202) Abigail Corso Abigail.Corso@elevateeergy.org (773)