Xcel Energy 2015 Annual Report Download - page 153
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Federal CWA Waters of the United States Rule — In June 2015, the EPA and the U.S. Army Corps of Engineers published a final rule
that significantly expands the types of water bodies regulated under the CWA and broadens the scope of waters subject to federal
jurisdiction. The expansion of the term “Waters of the U.S.” will subject more utility projects to federal CWA jurisdiction, thereby
potentially delaying the siting of new generation projects, pipelines, transmission lines and distribution lines, as well as increasing
project costs and expanding permitting and reporting requirements. The rule went into effect in August 2015. In October 2015, the
U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay of the final rule, pending further legal proceedings.
Air
GHG Emission Standard for Existing Sources (Clean Power Plan or CPP) — In October 2015, a final rule was published by the
EPA for GHG emission standards for existing power plants. States must develop implementation plans by September 2016, with the
possibility of an extension to September 2018, or the EPA will prepare a federal plan for the state. Among other things, the rule
requires that state plans include enforceable measures to ensure emissions from existing power plants achieve the EPA’s state-specific
interim (2022-2029) and final (2030 and thereafter) emission performance targets. The CPP is currently being challenged by multiple
parties in the D.C. Circuit Court. In January 2016, the D.C. Circuit Court denied requests to stay the effectiveness of the rule as well
as ordered expedited review of the CPP, with briefings to be completed and oral arguments held by June 2016. Following the D.C.
Circuit Court’s denial of motions for stay, multiple parties filed requests for stay with the U.S. Supreme Court. In February 2016, the
U.S. Supreme Court issued an order staying the final CPP rule. The stay will remain in effect until, first, the D.C. Circuit Court and
then the U.S. Supreme Court have ruled on the challenges to the CPP.
Xcel Energy has undertaken a number of initiatives that reduce GHG emissions and respond to state renewable and energy efficiency
goals. The CPP could require additional emission reductions in states in which Xcel Energy operates. If state plans do not provide
credit for the investments we have already made to reduce GHG emissions, or if they require additional initiatives or emission
reductions, then their requirements would potentially impose additional substantial costs. Until Xcel Energy has more information
about SIPs or knows the requirements of the EPA’s upcoming final rule on federal plans for the states that do not develop related
plans, Xcel Energy cannot predict the costs of compliance with the final rule once it takes effect. Xcel Energy believes compliance
costs will be recoverable through regulatory mechanisms. If our regulators do not allow us to recover all or a part of the cost of capital
investment or the O&M costs incurred to comply with the CPP or cost recovery is not provided in a timely manner, it could have a
material impact on results of operations, financial position or cash flows.
CSAPR — CSAPR addresses long range transport of PM and ozone by requiring reductions in SO2 and NOx from utilities in the
eastern half of the United States using an emissions trading program. For Xcel Energy, the rule applies in Minnesota, Wisconsin and
Texas. CSAPR compliance in 2015 did not and 2016 is not expected to have a material impact on the results of operations, financial
position or cash flows.
CSAPR was adopted to address interstate emissions impacting downwind states’ attainment of the 1997 ozone NAAQS and the 1997
and 2006 particulate NAAQS. As the EPA revises the NAAQS, it will consider whether to make any further reductions to CSAPR
emission budgets and whether to change which states are included in the emissions trading program. In December 2015, the EPA
proposed adjustments to CSAPR emission budgets which address attainment of the more stringent 2008 ozone NAAQS. If adopted as
proposed, the ozone season emission budget for NOx in Texas would be reduced by approximately 14 percent, which may lead to
increased cost to purchase emission allowances.
Regional Haze Rules — The regional haze program is designed to address widespread haze that results from emissions from a
multitude of sources. In 2005, the EPA amended the BART requirements of its regional haze rules, which require the installation and
operation of emission controls for industrial facilities emitting air pollutants that reduce visibility in certain national parks and
wilderness areas. In their first regional haze SIPs, Colorado, Minnesota and Texas identified the Xcel Energy facilities that will have
to reduce SO2, NOx and PM emissions under BART and set emissions limits for those facilities.
PSCo
In 2011, the Colorado Air Quality Control Commission approved a SIP (the Colorado SIP) that included the CACJA emission
reduction plan as satisfying regional haze requirements for facilities included within the CACJA plan. In addition, the Colorado SIP
included a BART determination for Comanche Units 1 and 2. The EPA approved the Colorado SIP in 2012. Emission controls at
Hayden Unit 1 were placed into service in November 2015 and Hayden Unit 2 is expected to be placed into service in late 2016, at an
estimated combined cost of $75.2 million, completing the pollution control equipment required on PSCo plants under the CACJA.
PSCo anticipates these costs will be fully recoverable through regulatory mechanisms.