State regulators say they won't bargain under "threat of blackouts," but their complaint only highlights how the power is shifting.
The Michigan Public Service Commission is...
in October. Until that is resolved, New Source Review standards remain uncertain. I think it's doubtful that the routine maintenance and repair rules will survive the legal challenges. The old rules are pretty well founded and well within the scope of what Congress intended.
Fortnightly: How does the rule change affect the new source review enforcement actions that the EPA began a few years ago?
Wehland: It will be interesting to see what happens with the enforcement litigation as it works through the courts. There are drastically differing opinions on how the former rules should be interpreted, and there will be some significant decisions that will have a drastic effect on how we view the rules.
In the Ohio Edison and Duke Energy cases, for example, the district courts have reached diametrically opposed decisions on whether you judge routine maintenance and repair with reference to the source by itself, or with reference to the industry as a whole. That is important for these life-extension projects because they happen only once for a unit. But if the reference test is the whole industry and everybody is doing it, then such a project looks more routine.
The other place where they differ in irreconcilable ways is how you should calculate whether there has been an emissions increase as a result of a project. The North Carolina decision defines an emissions increase as your hourly emissions rate. It doesn't allow the government to use changes in capacity factors in determining emissions increases. That is in direct conflict with the Ohio decision.
Getting some resolution on these issues one way or another will have significant ramifications.
Fortnightly: What about new emissions control requirements? The EPA has proposed mercury-reduction standards for the first time, and some lawmakers at the state and federal level are pushing greenhouse-gas emissions control. What do these trends mean for power planners?
Hall: These things are critical to us as we plan our future generation portfolio. We think we'll have a regulatory requirement to control mercury, and we don't have the technology on the market to do that today. Also, Bush has made a commitment to reduce carbon emissions, and we have a large coal fleet in the Carolinas. I'm not an expert, but the only viable technology seems to be carbon sequestration. Unfortunately that only works in some regions of the country where you have geologic formations that can accommodate the carbon. Nothing has surfaced that will work on all our assets across the nation, so that will be a difficult one to tackle.
However, we have confidence that the industry will innovate and get actively involved with research and development around both mercury and carbon. We ourselves are involved with a couple of DOE projects, looking at mercury-reduction technology.
Zimmer: The mercury decision ripples back on these other questions too. If you are going after mercury, you can't do it in isolation from other emissions as well. Is this laying the foundation for no mercury action?
Capps: We think the Bush administration's Clear Skies initiative will get passed somewhere around 2008,