### Statement of the Edison Electric Institute

Environmental Protection Agency

Public Hearing Proposed Rule: Implementation Plans to Reduce Interstate Transport

o f Fine Particulate Matter and Ozone
Philadelphia, Pennsylvania August 26 , 2010

Page 1 Good morning, m y name is John Kinsman

. I am Senior Director, Environment at the Edison
Electric Institute (EEI) in Washington, D.C.

EEI is the association of U.S. shareholder

- owned electric companies

. Our members serve 95 percent of the ultimate custom ers in the shareholder

- owned segment of the industry, and represent approximately 70 percent of the U.S. electric power industry.

EEI shares a commitment with the Environmental Protection Agency (EPA) to further reduce emissions from power generating fac ilities and support s the general policy objectives underlying
EPA ’ s proposed Transport R ule

.

T h e electric power industry has already made significant p rogress in reducing emissions in sulfur dioxide ( SO 2 ) and nitrogen oxides ( NO x ) , even while the nation has consumed more energy and the economy has grown. P ower generation NO x emissions during the ozone season in the Eastern U.S. have declined 81 percent since 1990

. N ational power plant NO x emissions declined 70 percent over the same time period. The ind ustry emitted only 12 percent
of national NO x in 2009.

N ational SO 2 emissions from power plants in 2009 were 64 percent lower than in 1990

.

This proposed rule will require substantial additional emission reductions. For example, power plant SO 2 em issions in t he three states in which EPA is holding these public hearings ( Georgia,
Illinois and Pennsylvania ) under the proposed rule will be reduce d 8 3.0 to 90.2 percent (88 .3 percent for Pennsylvania) from 1990 to 2014.

### Page 2

While some of our member comp anies have stated that they are able to meet the requirements of the proposed rule

– due to some combination of individual company approaches to addressing environmental issues, state requirements, settlement agreements, fuel mix or other
factors

– other E EI members have concerns regarding the proposed Transport Rule.

One concern is that the proposed Transport Rule establishes new reduction requirements that must be met only 6 and 30 months after the final Transport Rule is issued.

S ome of our member companies have expressed concern that EPA’s assumptions regarding their current control technology projects may be inaccurate and that they will have difficulty in achieving the initial 2012 compliance deadlines

.

There also is concern by some companies t hat simultaneously adding controls at many units can stress labor, materials, and state and local regulatory agencies, and that c ompleting simultaneous control installations by the end of 2013 to meet the 2014 compliance deadline is
unrealistic. This may be especially true in nine states where EGUs would need to reduce their
SO 2 emissions by at least 50 percent from 2009 to 2014.

S ome EEI member companies believe that the full schedule, from conceptualization to regulatory approvals by financial regula tors and air quality permitting agencies, through construction and operation of a SO 2 scrubber, can take up to 60 months. This assumption
stands in stark contrast to EPA’s estimate that a new scrubber can be installed in 27 months

.

EEI believes that it i s imperative that EPA, the Federal Energy Regulatory Commission ( FERC )
, the Department of Energy (DOE) and states work together to utilize all tools available to meet compliance targets while maintaining electric system reliability

.

EEI has misgivings reg arding the proposed Transport Rule p rovid ing l ittle long

- term c ertainty because its requirements will be superseded in the near

- future. EPA mentions in the proposal
that it is likely to alter this proposal to address wintertime emissions related to attain ing the 24

- hour PM 2.5 standard . EPA also will issue a separate proposal regarding NO x emissions related
to the 1997 ozone standard . EPA also has indicated it will issue a “Transport Rule II” related to a tightened ( October 2010) ozone standard , and it is almost certain that EPA will propose an additional major t ransport r ule by 2013 to address a more stringent late

- 2011 NAAQS for

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particulate matter. These rules are a ll in addition to the power generator MACT rule , which will
not be finalized until late

- 2 011 ( about 6 months after the final Transport Rule ) and which will greatly influence company decisions regarding SO 2 control equipment.

In order to continue to effectively produce electricity and reduce emissions, the electric sector needs clear, coordi nated and flexible regulations that provide certainty for power companies to plan multi

- billion dollar investments, many of which must serve decades into the future. Only through carefully crafted regulations can EEI members continue to minimize costs to c ustomers and impacts on shareholders, avoid straining natural gas supply and prices, and continue efficient and reliable electric generation using diverse, domestic energy resources.

Apart from our concerns, EEI supports several aspects of the flexibilit y provisions that EPA has proposed

.

EEI supports , among EPA’s stated options, the Agency’s preferred approach that would allow limited interstate trading

. The alternative approaches discussed by EPA in the rulemaking would provide much less flexibility and unnecessarily increase costs of emission reductions.

EEI supports EPA’s proposal to not use the variability limit approach during 2012

- 2013 , and to

a llow banking of surplus emission reductions

.

However, even with EPA’s preferred approach for limited emissions trading, EEI is concerned
that some companies may choose to avoid emissions trading because they would seek to avoid
the risk that EPA’s after

- the

- fact variability analysis brings to the compliance demonstration
process. EEI is also concerned t hat trading restriction between Group 1 and Group 2 facilities can pose a problem for some of our members with service territories that cross these state lines, but where facilities lie in the same airshed.

That concludes my remarks. EEI will be supple menting these oral remarks with additional written comments. Thank you for the opportunity to provide these comments today.