The U.S. Energy Information Administration on March 25 released a new study that concludes the annualized $836-million cost for achieving compliance with Phase I sulfur dioxide emission requirements in 1995 represents only 0.6 percent of the $151 billion operating expenses of investor-owned utilities in 1995.

According to the report, The Effects of Title IV of the Clean Air Act Amendments of 1990 on Electric Utilities: An Update, electric utilities have brought 260 generating units named in Title IV of the Clean Air Act Amendments of 1990 and their substitution and compensating units into compliance with the Phase I requirements. The 1995 emissions from these units (5.3 million tons) accounted for 45 percent of total utility emissions, compared with 62 percent in 1990. A detailed examination of six utilities found that their compliance strategies did not cause an increase in their electricity prices in 1995, as compared to 1990 prices in real terms.

The EIA report looks at other effects of compliance with Phase I of the Acid Rain Program in 1995, developments since Phase I in controlling nitrogen oxide emissions and air toxics, and strategies for compliance with Phase II, which begins in 2000. Major findings are:

• Blended Coal. Most utilities used fuel switching and blending of higher and lower sulfur coal to reduce sulfur-dioxide emissions.

• Coal Transport. The switch from high-sulfur to low-sulfur coal has affected coal distribution patterns.

• Delayed Retrofits. Some utilities have used allowances to continue burning higher sulfur coal and defer cost of boiler modifications or scrubber retrofits. (The recent decline in coal prices, reflected in allowance prices, makes that option economically attractive.)

• Phase II Alternatives. Due to competition, utilities are reluctant to invest in capital modifications. So, utilities that planned to install scrubbers for Phase II compliance have deferred installation of canceled them, in favor of fuel switching of allowance purchases.

The report is available on EIA's website at http://www.eia.doe.gov.

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