Edison Electric Institute statement on EPA 2004 Air Quality Regulations

WASHINGTON — April 14, 2004 — The new air quality rules outlined today by EPA Administrator Leavitt comprise a sweeping set of new emission reduction requirements that hit the electric power sector particularly hard.

Our industry has cut key emissions by 40 percent under existing Clean Air Act programs, and EPA’s new rules will require us to cut emissions of sulfur dioxide (SO2), nitrogen oxides (NOx) and mercury by another two-thirds over the next 15 years.

EPA’s mercury and interstate regulations represent the biggest single set of emissions reductions ever imposed on the electric power sector.

Achieving such aggressive emission cuts is going to require the installation of pollution controls on hundreds of generating facilities at a cost of billions of dollars each year. We appreciate the fact that EPA is seeking to give industry some flexibility in determining how best to meet the requirements. This is critical if we are to reduce emissions in a manner that is cost-effective and ensures reliability.

That said, we have some concerns with both the proposed mercury rule and the interstate air quality proposal for SO2 and NOx. For example, EPA’s mercury cap-and-trade proposal ultimately leaves the design of the program up to individual states.

If not all states participate in emissions trading, the cost of achieving emissions cuts could be significantly higher than under a national cap-and-trade program, which would reduce emissions even faster because there would be increased opportunities and demand for early reductions.

Regarding the interstate transport rule for SO2 and NOx, EPA envisions companies having just three years to implement the regulation once the agency and the states finalize requirements in 2007. While some companies may be able to achieve compliance under this schedule, many others will not be able to do so.

For this and other reasons, it is crucial that installations be spread over time to ensure reliable and low-cost electric generation. We agree with the EPA administrator that reasonable, comprehensive legislation to reduce power plant emissions of SO2, NOx and mercury remains far preferable to regulation.

A legislative approach along the lines of the Clear Skies Initiative would provide far greater environmental and business certainty, while regulation generally fails to address the overlapping nature of more than a dozen existing air programs already in place.

We’ve made major strides already in reducing emissions, despite dramatic increases in electricity demand and electricity produced by coal, and we’ll make even greater reductions in the future.

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