Electric Competition Moves On
The recent months have brought a flurry of activity in a number of states:
ARIZONA: The Arizona Corporation Commission approved rules opening...
SIP Call. For states that fail to submit a plan, the EPA says it can establish how the states will comply with the new order by submitting a federal implementation plan (FIP).
A Rule Based in Science or Economics?
Utility interests argue that EPA's new rule is based on economics rather than science.
"The problem is that EPA has based this rule not on air quality analysis but a cost analysis," says Kathy Beckett, an attorney with Jackson and Kelly PLLC, representing the Midwest Ozone Group. The MOG is an ad hoc coalition of nearly 30 electric utilities, coal and petroleum companies, and affiliated organizations.
"Those sources they picked that could reduce NO x at an average of $2,000 per ton were removed. That was the rule of thumb they used to identify control. The problem we have is that the Clean Air Act doesn't say you should pick cost and then design emission-reduction programs," Beckett argues.
She notes that the Clean Air Act instructs the EPA to look at the ambient air quality standards, decide which parties are impacting them, and then decide control.
Beckett's argument carries a certain irony. Usually, private industry will ask regulators to consider costs in setting environmental policy. But here, it is the other way around. This flip-flop did not go unnoticed by one of the D.C. Circuit judges who reviewed the EPA's NO x SIP Call.
Judge Stephen F. Williams called it a "gamble"--a risky strategy by certain states with small NO x contributions. He speculated that if the law in fact barred the EPA from considering cost along with health effects, the agency would have acted differently. Instead, it would have scaled back on its SIP Call. Said Williams, "If EPA were barred from considering costs, it would never have included such states."
Williams implied that this gamble led some of private industry petitioners to switch back and forth in briefs and oral arguments on whether EPA should or should not consider costs--so much so that he believed that "a summary of the different vacillations is in order."
Overall, Williams concluded that "no party makes any claim that EPA was either confined to adopting rules whose benefits exceeded their costs, or permitted to use that criterion in selecting its final rule."
EPA's Scavo refutes the industry's claim that the SIP Call is based on economics.
"The way we figured out the remedy was to apply highly cost-effective control measures. But that is not how we determined how many states are in and who the requirements apply to; we based that on air quality analysis," she says.
"We did air quality analysis and modeling to determine which states caused other states problems because of transport of ozone. That was all based on air quality. We determined the control strategy by what was highly cost-effective to reduce NO x emissions."
Scavo adds that EPA did a cost analysis and determined that measures costing between $1,000 and $2,000 per ton were cost-effective. "That is how we came up with the controls that we apply to their emission