The recent Supreme Court ruling to halt implementation of the Environmental Protection Agency’s Clean Power Plan pending judicial review has thrust the utility industry into a state of uncertainty, according to commentary from the Center for Strategic and International Studies. “Whatever the ultimate fate of the rule, the stay increases the level of regulatory uncertainty in the power sector. Uncertainty is the bane of a utility’s existence, as it presents challenges for long-term investment planning and asset management decisions,” authors John Larsen, Sarah Ladislaw, Kyle Danish, and Michelle Melton wrote.
The Supreme Court on Feb. 9 voted 5-4 to stay the rule until a legal challenge in the Court of Appeals for the District of Columbia Circuit, and any resulting appeals, are resolved. The rule, which requires states to develop action plans to meet federally set carbon emissions reduction goals, is likely to be ultimately decided by the Supreme Court in mid-2017 or 2018.
Complications arise when considering the deadlines included in the rule, according to the authors. Under the rule, states were to submit their plans or requests for a two-year extension in September 2016, and final plans were due in 2018. It seems likely that if the rule is upheld, those deadlines will be shifted, the authors wrote. “Less certain is whether the 2022 start of the CPP compliance period also would be extended,” the Feb. 16 commentary says.
This confusion will “increase the risk of discontinuities in planning processes underway in and among states and regions and create more confusion for utilities and other power providers in the sector, with the potential for suboptimal economic and emissions outcomes,” the authors wrote.
