EPA Affordable Clean Energy (ACE) Rule

On Aug. 21, 2018, the Environmental Protection Agency (EPA) released its proposed rule to replace the 2015 Clean Power Plan and regulate carbon dioxide (CO2) emissions from coal-based power plants. The proposed rule appears to provide Basin Electric with an achievable plan consistent with EPA’s authority under the Clean Air Act.

The Affordable Clean Energy (ACE) Rule, would direct states to develop standards of performance for individual power plants by applying a prescribed list of technologies that constitute the “Best System of Emission Reduction” (BSER).

Candidate technologies for BSER:
• Neural network/intelligent soot-blowers
• Boiler feed pumps
• Air heater and duct leakage control
• Variable frequency drives
• Turbine upgrade
• Redesign/replace economizer
• Improved operation and maintenance practices

The proposed ACE Rule recognizes the investments made by Basin Electric in its coal-based facilities to improve efficiency and reduce emissions, and would allow its membership to continue utilizing those assets in a carbon-constrained future. Most importantly, the proposed rule would be consistent with federal law by focusing on actions that are achievable “inside the fence” of a regulated facility.

Additional background

In 2015, EPA released the Clean Power Plan (CPP) to reduce CO2 emissions from the electric power sector. However, rather than focusing on individual power plants, the CPP represented a vast overreach of EPA’s authority under the Clean Air Act and sought to regulate the entire power sector. In addition to efficiency improvements at power plants, the CPP sought further reductions by forcing utilities to further shift generation to natural gas and renewables.

Basin Electric estimated the CPP would have cost its member-owners $5 billion to implement due to stranded costs in its existing coal generation and the cost to replace that generation with new construction and/or market purchases.

Basin Electric joined with other impacted utilities, industries, and 27 states in filing a lawsuit against EPA to overturn the CPP on the grounds that it exceeded EPA’s authority. These lawsuits resulted in the first-ever stay of an administrative rule from the U.S. Supreme Court, preventing the CPP from being placed into effect until all legal action was complete by the D.C. Circuit Court of Appeals and/or the Supreme Court.

Since 2000, Basin Electric has sought to diversify its generation portfolio while managing load growth.