Another approach might be to use a federal energy efficiency standard to accomplish a similar
goal as an efficiency frontier, but allow the states to design the program based on local fuel
resources, the age of power plants under their jurisdiction, and other criteria defined in
legislation. The efficiency standards could increase over time, and require CFPPs not meeting
these standards to retire.
Deference to state authorities and regional compliance strategies have been suggested by
observers with regard to EPA’s deliberations over GHG reduction for existing CFPPs. State public
utilities commissions (or similar entities) often require utilities to conduct book depreciation
studies (either in connection with rate cases or independent of rate cases). Such studies commonly
examine the physical condition of power plants, and the utility’s recovery of its investment in
electric plant. Federal legislation could tie incentives for efficiency improvements to such studies
and direct states to meet individual or regional goals for GHG reduction.