Reg and Dereg
The electric power industry must comply with literally hundreds of environmental regulations, including dozens of rules created in the wake of the federal Clean Air Act (CAA) and Clean Water Act (CWA). Other significant federal regulations include the Toxic Substances Control Act and the Resource Conservation and Recovery Act, which control chemicals and hazardous waste, respectively. In addition to federal rules, electric companies are subject to environmental regulations issued by individual states.
The most significant environmental regulations for the electric power industry involve air emissions from fossil fuel-based plants. The Acid Rain Program, created with a series of amendments made to the CAA in 1990, and subsequent programs to address ozone transport have helped to significantly reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOX) from electricity generation.
In 2005, the U.S. Environmental Protection Agency (EPA) issued three new major regulations to further reduce SO2, NOX, and mercury emissions: the Clean Air Interstate Rule (CAIR), the Clean Air Mercury Rule (CAMR), and the Clean Air Visibility Rule (CAVR). EPA estimates that complying with these rules will cost the electric power industry $47.8 billion between the years 2007 to 2025. Affected states are now focusing on how to implement CAIR and CAMR. Many states will adopt both federal rules, while others are considering adopting regulations or passing legislation that go beyond the requirements in EPA’s rules.
While CAIR applies to 29 eastern states and the District of Columbia, CAVR applies to all states and will require additional controls for SO2 and NOX to reduce haze that affects National Parks and wilderness areas.
In addition, many companies participate in programs to reduce emissions of carbon dioxide (CO2) and other greenhouse gases. In 2004, leaders from the nation’s power sector pledged to reduce collectively the industry’s greenhouse gas emissions intensity—the amount of CO2 emissions per kilowatt-hour of electricity. In 2005, the latest year for which data are available, the electric power sector undertook programs or projects that reduced, avoided, or sequestered more than 267 million metric tons of carbon-equivalent greenhouse gas emissions—accounting for approximately 64 percent of all reductions reported to the federal government in that year. A number of states are imposing regulatory control programs on CO2 emissions, and Congress continues to consider mandatory greenhouse gas emissions-reduction programs.
The electric power industry uses billions of gallons of water each day to operate fossil, nuclear, and hydroelectric generating plants. The CWA controls the discharge of pollutants into U.S. waters through the National Pollutant Discharge Elimination System (NPDES) program. It also directs EPA to set technology standards to control the release of pollutants to waters, key provisions of which affect utility cooling water intake structures, thermal discharges, storm water run-off, wetland management, and hydropower licensing. The electric power industry faces significant new investments to comply with recent rules initiated in 2004 under the CWA, which require modification of water intake structures to minimize adverse impacts on aquatic organisms. According to EPA, complying with the new water regulations will cost the electric power industry $400 million per year.
Electric companies also are subject to numerous regulations for waste disposal, hazardous waste handling, recycling, species protection, and land management.
U.S. Environmental Protection Agency, Office of Air and Radiation, October 2005.
U.S. Department of Energy, Energy Information Administration, Voluntary Reporting of Greenhouse Gases Program 2004, March 2006. Analysis by Edison Electric Institute.
U.S. Environmental Protection Agency, Office of Water, Economic and Benefit Analysis for the Final Section 316(b) Phase II Existing Facilities Rule, February 2004, Chapter B-1, "Summary of Compliance Costs."