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Author: Justin Gillis
Date: 20th January 2015

Two charitable groups will spend $48 million over the next three years to help states figure out how to reduce emissions from electricity production, an effort to seize the possibilities that are opening up as the cost of clean power falls.

The plan is to be announced Wednesday morning in New York. Half the money will come from Bloomberg Philanthropies, the charitable organization set up by Michael R. Bloomberg, former mayor of New York City, and half will come from Mark Heising and Elizabeth Simons, a California couple who have taken a strong interest in reducing the risks of climate change.

In interviews, people involved in the project said the goal was to provide technical assistance, including economic forecasting and legal analysis, for a dozen or so states that are willing to consider ambitious clean-energy plans.

One motive for the grant is that the Obama administration is expected this summer to make final its emissions-cutting targets for the power industry. If that plan survives expected political and legal challenges, it may require extensive revamping of electricity markets that are largely regulated by the states.

In addition, the low cost of natural gas, the falling cost of renewable energy and the rise of technologies that can shave electrical demand are all putting pressure on electric utilities, especially those dependent on coal. Even without the impetus of President Obama’s plan, those factors would require adjustments in the electricity markets, many energy analysts have concluded.

In an interview, Mr. Heising said that state governments needed to seize the moment to take full advantage of the coming possibilities for cleaning up the grid — and, at the same time, to avoid undermining the economics of the utilities that Americans depend on for a reliable supply of electricity.

“The utility businesses are being heavily disrupted,” Mr. Heising said. “That’s creating some real stress for the utilities and their revenue model. It needs to be addressed in a fair and comprehensive way.”

The disruption is most evident so far in Europe, where utilities were slow to embrace renewable power even as ordinary citizens, responding to government incentives and falling costs, did so in droves. The stock market valuation of Germany’s big utilities has fallen drastically, and they are now scrambling to catch up to the changes on the grid.

American states are generally behind Europe in the rollout of renewable power. Experts say that gives them time — a few years, at most — to get ahead of the coming changes. In several states, utilities have begun to sense the coming threat and are trying to roll back existing state rules that favor solar and wind power, though environmentalists are fighting back and the utilities have had only modest success so far.

Mr. Obama’s Clean Power Plan, which is being developed by the Environmental Protection Agency, will most likely require most states to discourage coal-burning while encouraging the greater use of natural gas, renewable power and efficient buildings and appliances. States will have some leeway to design their own strategies, but any state government that fails to do so will run the risk of having a strategy imposed on it by the federal government.

Thus, even some of the states that intend to challenge Mr. Obama’s plan in court are expected to hedge their bets by coming up with a backup strategy.

The $48 million from Bloomberg Philanthropies and the Heising-Simons family will not go directly to state governments. Instead, the money will fund groups that can help the states with their planning.

Two national environmental groups with technical expertise in the electricity markets, the Environmental Defense Fund and the Natural Resources Defense Council, are expected to be among the grantees. But the bulk of the money will go to groups with a state or regional focus.

Among the likely grantees, for example, is the Center for the New Energy Economy at Colorado State University, run by a former Democratic governor of Colorado, Bill Ritter, who signed dozens of clean-energy laws during his term.

In an interview, Mr. Ritter said his group was working with both Republican- and Democratic-led states to scrutinize the Obama administration’s plans, as well as to weigh the broader issues. A crucial priority for the states will be keeping electricity costs reasonable, Mr. Ritter said.

“I think it’s fair to argue that there’s economic benefit to states that make the transition to a clean-energy economy,” Mr. Ritter said. “How do you do it so it’s not on the back of ratepayers who are middle- and lower-income?”

Read the full article at The New York Times