Environmental Compliance

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Environmental Compliance Generation Capacity
(etc.)
Kenneth A. Colburn New Hampshire Department of
Environmental Services

• NGA Center for Best Practices
• State Executive Policy Forum on Electricity
  Restructuring
• April 4-6, 2001 Philadelphia, PA

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First Things First...

• Californias problems were not caused by
  environmental regulation
• Several plants approved but not constructed
• No supply-side or demand-side response over two
  decades of increasing demand?
• Price-capped competition? An oxymoron!
• Compulsory spot market purchases
• Abuse of market power also evident...

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Are Environmental Regulations Stopping Plants?

• NO!
• Most onerous air regulations to date concern
  ozone nonattainment, but...
• Many new power plants are being approved and
  built in ozone nonattainment areas!
• (e.g., NH, MA, CT, NY, NJ, etc.)

4
Will Restructuring Be Good for the Environment?

• Probably not, under the existing federal Clean
  Air Act
• Regulates input ignores output
• Built in unlevel playing field
• Discourages improvement (e.g., NSR)

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Will Restructuring Be Good for the Environment?

• But it would be, if the interests of the economy
  are aligned with the interests of the environment
• Regulate based on output
• Insist on Environmental Comparability
• (i.e., un-grandfathering) to level the playing
  field eliminate NSR

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The Bad News Environment Will Keep Coming

• New NAAQS for Ozone
• New NAAQS for Fine Particulate Matter
• 22-State NOx SIP Call / 126 / NSR Suits
• New Regional Haze program
• Mercury and other toxic emissions
• Climate Change
• Acid Rain II?

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The Good News Its Likely to Be Good for the
Economy

• Health care costs
• Tourism (vistas, water quality, etc.)
• Forest and crop productivity
• Place matters more Quality of Life
• Greater certainty gt Less Stranded Costs
• Demand peaks gt Highest system costs
• Reliability comes with efficiency
• Smaller energy projects gt more jobs
• More efficient gt More competitive

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Recommendations

• Pursue Integrated Air Quality Solutions
• Four-Pollutant Approaches like NHs Clean Power
  Strategy
• Reduce SO2 by 75
• Reduce annual NOx by 70
• Reduce mercury by 75
• Reduce CO2 10
• Allows trading
• Takes advantage of co-control benefits
• Provides greater certainty asset value
• First Mover advantage

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Recommendations (continued)

• Get the signals right (e.g., output-based level
  playing field, time-of-day pricing?)
• Think ahead (climate isnt going away)
• Provide greater certainty
• Do it right the first time vs Do it over
• Work the Demand Side too (peaks create
  disproportionate costs)
• Use Environmental Disclosure effectively

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Old or New Energy Path?