Study: EPA rules could cost industry billions

Consumers in 21 eastern states could be facing a $7-12 billion bill to ensure that coal-powered electric utility plants substantially reduce their nitrogen oxide emissions (NOx) by 2003, according to a new study of the impact of Environmental Protection Agency rules to reduce ozone.


Consumers in 21 eastern states could be facing a $7-12 billion bill to ensure that coal-powered electric utility plants substantially reduce their nitrogen oxide emissions (NOx) by 2003, according to a new study of the impact of Environmental Protection Agency rules to reduce ozone.

A new study by Fuld & Co., a research and consulting firm in Cambridge, Mass., concludes that an EPA requirement that state implementation plans (SIPs) be submitted by yearend will cause power plants to install expensive technology without testing the most cost effective remedies that could be implemented in phases.

The EPA ruling was handed down in 1998 and reaffirmed by the federal Circuit Court of Appeals in March 2000 to reduce state-to-state transport of air pollution from approximately 140 power plants. It would require an 85% reduction of NOx emissions from 1990 levels by 2003.

Over the past 20 years, the US has reduced NOx emissions by only 13% compared to a 60% reduction in the Czech Republic, 38% in the UK, and 31% in Germany. Many scientists say NOx can create ground level ozone which, when inhaled, can cause acute respiratory problems, aggravate asthma, reduce lung capacity, inflame lung tissue, and impair the body's immune system.

It also contributes to regional haze and global warming. Electric utilities account for 33% of the US's annual NOx emissions.

Democratic Presidential candidate Albert Gore Jr. announced June 26 in his climate initiative that federal funds should be allocated to help defray the cleanup costs and stabilize electricity rates. Republican Presidential candidate George Bush Jr. has not commented on the EPA ruling.

With a deadline for submitting SIPs only a few months away, it is not clear whether power companies can evaluate a range of control technology options to balance emission control requirements with compliance costs, says Ravi Krishnan, associate director, public utilities practice, Fuld & Co. He says a 2-3 year extension would give power companies time to explore a mix of technologies that could be implemented in phases and not unduly burden operations and, ultimately, the consumer through higher electricity rates.

"The challenge faced by the industry is that, while many people seek environmental protection, few (including legislators) want to pay more for the energy we use to heat and light our homes, fuel our vehicles, or power our factories," Krishnan said.

More in Government