Utility executives face volatile energy markets, skyrocketing fuel prices, and changing federal energy policies. How are utilities benefiting from the turnaround in energy trading?
Midwest vs. Northeast? EPA's NOx Policy
have clean hands with which to point the finger of culpability in the Midwest and Southeast." He noted that Connecticut, New York, Massachusetts and Rhode Island are behind in implementing mandatory measures under the CAA.
"[W]e find it puzzling that EPA would be in favor of a FIP to be implemented automatically to enforce the SIP call, when no such action has yet been taken with respect to any of the Section 126 petitioning states, even though they have missed statutory deadlines for years," said Flannery. He added that the MOG urges EPA not to adopt the FIP.
The Northeast Midwest Institute also has grave concerns about the EPA's smog-reduction plan, specifically concerning the federal NOx budget trading program upon which the ruling relies.
While the Institute applauds the "general idea of a market-based system," said Tina Kaarsberg, "we have serious qualms about the initial and annual allocation schemes that are proposed. We believe they would lock in the current, inefficient electric generation at the expense of efficient, cleaner generators."
Instead, she said, pollution reductions should be achieved by increased efficiency. "In our view, the most cost-effective way to reduce emissions is to use the market to reward those who produce the most electricity for the least NOx emissions," said Kaarsberg. "Thus, a perfect market-based NOx allocation would be to grant allocations weighted by the electricity generated per pound of the NOx emitted."
Mining Interests. Quinlan Shea of the National Mining Association attacked the "ivory-tower, economically damaging, condescending mentality that is pervading [the EPA and] particularly these air rules." Further, he said, the association questions the EPA's authority as it relates to the SIP call and both related proposals.
"The [SIP call] rulemaking process has been flawed, if not illegal. Hence, the Section 126 and FIP proposals are, in my opinion, the fruit of that poisonous tree, and they should be withdrawn," Shea said.
"NMA views EPA's NOx regulatory paradigm ¼ as a thinly veiled attempt to pressure states into adopting the agency's choice of control measures through its threat of immediately imposing a FIP on states whose SIP submissions do not conform precisely to the final SIP call," he continued.
"Conversely, available case law indicates the agency has limited discretion to disapprove SIPs, again, so long as the minimum requirements of the [CAA] are met," said Shea.
The NMA also has concerns about the output-based approach EPA is proposing for calculation of allowance allocations. "In effect, this approach could dramatically decrease the effective emissions rate required to be met by fossil fuel-fired units to far below the 0.15 pound per million Btu rate, while granting a windfall in terms of unneeded allowances to nuclear and hydro units," said Shea.
In his final comments, Shea addressed "the states whose rights and economies are about to be trampled on." To them he advised, "Just say no."
Sidebar: Utilities Question SIP Call; AEP says costs would top