OREANDA-NEWS. The Federal Energy Regulatory Commission (FERC) is trying to figure out what role it will take once states begin writing plans for complying with a proposed rule that aims to cut power plant CO2 emissions.

The rule has put the agency in a tricky spot because it cannot change the stringency of the CO2 reduction goals of the "Clean Power Plan". But the agency still might be forced to deal with the fallout of the rule if it pushes up power prices or threatens grid reliability. FERC has rebuffed suggestions that it should lobby the Environmental Protection Agency (EPA) to weaken the finalized rule.

FERC is still trying to figure out what it will do about reliability concerns. States under the rule must develop compliance plans that EPA will review, but it is unclear what the process will be for making sure the plans do not threaten grid reliability. Many want the final rule to include a "safety valve" that would suspend state-specific emission targets if reliability is at risk.

Speaking at a technical conference in Washington, DC, on the rule today, FERC chairman Cheryl LaFleur pressed a top EPA regulator about what role it could play with the rule and where it could "add value" to a process it does not control. She said she did not want FERC to end up having to tell states what they could do in their compliance plans, in part because it could put the commission on "jurisdictional thin ice pretty fast."

EPA's top air regulator Janet McCabe offered no concrete ideas about the commission's role but agreed to think about where it "makes sense for FERC to be involved." She said it would be a "natural time" for the agencies to be talking when EPA begins reviewing state compliance plans.

Precedent exists for such an arrangement. The two agencies have worked together on reliability concerns posed by EPA's mercury and air toxics standards, although LaFleur said that rule now seems like "child's play" compared with the changes that could occur under the CO2 regulations.

FERC member Philip Moeller said he wants the commission's five members to reach consensus soon on specific ideas for how EPA might structure a reliability safety valve, if it ends up including one in the final CO2 rule. He later told Argus that if the commission members cannot reach consensus, he would consider sending separate comments to the EPA.

The need to get clarity about the commission's role resonated with incoming FERC chairman Norman Bay, who asked representatives of eastern markets what specifically they had in mind for the commission. He said it reminded him of a quote that there are "two great tragedies in life: one is not getting what you want; and the other is getting it.