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Enron Mail |
You may have seen recent media reports on the topics of possible EPA action=
on New Source Review (NSR) regulation and multipollutant legislation, so I= wanted to summarize some of the important current developments: New Source Review: EPA was asked to conduct a 90-day review of NSR and come up with recommenda= tions for the larger Bush National Energy Plan. EPA held several public h= earings and solicited public comments, which closed July 27. Enron submit= ted comments (which I sent by e-mail on 7/30/01). EPA has indicated that = it will report to the President only on "impacts of NSR on the power sector= " on August 17 and delay any specific recommendations for NSR reform until = mid-September. Stories in the past few days have suggested that EPA's findings will "ease = emissions standards" on coal utilities. Such characterizations are somewhat= slanted, as they are based on information coming from environmental groups= who oppose any NSR reform -- but there is some substantive merit behind th= ese reports as well. NSR enforcement over plant modifications has been an extremely contentious = issue for electric utilities, and many industry sources have been lobbying = hard to relax EPA enforcement policy. From an administrative perspective, = this is a relatively easy reform for EPA to tackle -- it would only requir= e a change in "guidance" and not a lengthy regulatory process or legislatio= n. As you can see from the attached stories, environmental groups are ext= remely opposed to this type of action, and are using the media very effecti= vely to put pressure on EPA against such loosening of NSR enforcement stand= ards. EPA will likely recommend a number of broader administrative and legislativ= e changes to NSR, most requiring a longer trip through the legislative or r= egulatory process. Such changes could include reforms to BACT/LAER analys= is for new or existing sources, relief for cleaner sources, or standardizat= ion of some of the more arbitrary provisions of NSR. Given the longer-ter= m effort required, these proposed reforms may be newsworthy, but less likel= y to have an impact on the power sector in the short-term. Some of the recent complicating issues have been calls from other industry = sectors (manufacturers, refining, industrial boilers, gas pipelines) for N= SR relief. EPA would prefer to address power sector issues only, but may b= e politically forced to make recommendations in other sectors as well. It = is not yet clear what sectors or what issues they will address. Possible Outcomes/Impacts: Large coal utilities have spent a great deal of= resources putting pressure on the Administration on the modification & enf= orcement issues. The issue is the easiest short-term solution to offer fro= m a regulatory standpoint, so despite environmental group opposition, it is= likely that EPA will recommend immediate action in this area, along with l= onger-term reforms. For Enron businesses this means that coal, emissions a= nd power trading should expect renewed strength in the coal generation sect= or, as older assets would face less barriers to extending their life. Orig= ination opportunities (plant upgrades, capacity increases) may increase as = customers fears about enforcement actions subside. Industrial and gas pipe= line sectors may see relief in the modification area as well, if EPA decide= s to tackle sectors outside just power. Particularly on gas pipeline issue= s, turbine maintenance issues may be clear-cut enough for EPA to make a sim= ple , short term recommendation. Multipollutant Legislation Also making news lately were statements by EPA Administrator Christine Whit= man, indicating that EPA plans to release a proposal to scrap existing emis= sions regulations (NOx SIP Call/126 Rule, Regional Haze, SO2/Acid Rain) for= a more streamlined "multipollutant" plan. Multipollutant strategies have = been discussed for some time, but are becoming more newsworthy lately becau= se they were included as possible options under the Bush Energy Plan, and o= ffer potential solutions to NSR reform problems. EPA's proposed elimination of existing air programs is not as drastic as it= sounds -- in fact, it offers the opportunity to replace confusing, overlap= ping programs on multiple pollutants that are currently regulated or will s= oon be regulated by EPA with a more certain and flexible system. Prospects= for development of a multipollutant trading plan that reforms NSR are much= less predictable, however, and will require a longer-term legislative effo= rt. =20 In September 2001, we expect to see release of EPA's plan, as well as congr= essional consideration of several pieces of multipollutant legislation. We= are working closely with EPA, the White House, and Congress on these issue= s and will continue to keep commercial and corporate groups informed on the= progress of multipollutant strategies. Unless political dynamics change = drastically, we would not expect final action on multipollutant legislation= this year. As the issue evolves, we will be in touch with more specifics = on the legislation and Enron's strategy. If you have questions or would like more information, please contact me. =20 Jeffrey Keeler Director, Environmental Strategies Enron Washington DC office - (202) 466-9157 Cell Phone (203) 464-1541
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