Maryland Department of the Environment: Public Hearing - July 19, 2013 

Serious Nonattainment Ozone State Implementation Plan 

Donna McDowell 

24308 Hipsley Mill Road 

Laytonsville, Maryland 20882 

doona.mcdowell@ymajl.com 

Good afternoon. My name is Donna McDowell. I am a Sierra Club volunteer, and 

grandmother to two boys, 7 and 9. I am here for them. I reside in a rural corner of 

Montgomery County, a stone's throw from Howard County. Air knows no boundaries, 

and we are subject to bad air flowing our way from both Baltimore and the District of 

Columbia; as you probably know, both Howard and Montgomery Counties received a 

grade ofF for "'zone Days" from the American Lung Association. Only Garrett County 

received a C. 

The Baltimore Metropolitan area has suffered some of the worst air on the East Coast 

with 22 orange or red ozone alerts occurring during 2012. We are in day three of a 

Code Orange for air quality this week! In the American Lung Association report, State of 

the Air, the Washington-Baltimore area ranks 9th in the top twenty five most ozone 

polluted cities, and if you remove areas in California and Texas from the list, we are 

number one! 

As you know, ground level ozone pollution occurs when nitrogen oxides (NOx) and 

Volatile Organic Compounds (VOCs) react in the presence of sunlight and heat. Ozone, 

causes a multitude of health problems. According to the Physicians for Social 

Responsibility, "low levels of ozone can cause coughing, wheezing, shortness of breath 

and chest pain. At higher concentrations, breathing ozone can lead to more serious 

effects, including lung tissue damage, reduced lung capacity, asthma exacerbation, as 

well as increased risk of hospitalization for asthma, bronchitis, and other chronic 

respiratory diseases. Recent studies demonstrate that ozone exposure also may lead 

to premature death" (Coal-fired Power Plants, Physicians for Social Responsibility.) 

Ozone pollution disproportionately affects the poor, the young and the elderly, groups 

that make up large proportions of the population in Baltimore. The American Lung 

Association estimates that close to twenty five percent of the Baltimore City residents 

live in poverty, more than twenty percent are children, and close to 73,000 are over the 

age of 65. Children are prone to more risks from ozone pollution: their lungs are 

growing, they are outside and active during peak ozone periods in the summer, and 

they are more susceptible to respiratory infections. My grandsons, avid baseball 

players, play games several times a week and are exposed to more ozone than the 

average adult. Although most of us shield our children from smoking, we alone cannot 

shield them from ozone. And that is why we are here before MOE. 

What will help reduce the emission of dangerous nitrogen oxides (NOx) which mix with 

volatile organic compounds to produce ozone? One of the best ways is to regulate 

coal-fired power plants in the area especially those which do not have state-of-the-art 

controls for NOx. According to Physicians for Social Responsibility, "coal plants emit 

approximately 87 percent of utility-related nitrogen oxide (NOx) pollution ... the second 

largest source of NOx pollution after automobiles" (Coal-fired Power Plants, Physicians 

for Social Responsibility.) Coal-fired power plants also produce high levels of sulfur 

dioxide and mercury not to mention particulate matter pollution. (And as an aside, 

Baltimore City received a grade of F for particulates from the American Lung 

Association.) 

The Greeks believed that there were four elements on our planet: earth, air, fire, and 

water. Although we know now that this is not true, the Greeks were right in recognizing 

their importance to life on the planet. When we foul one of these "elements," we foul the 

others. Not only do nitrogen oxides pollute the air, they also foul the water, in this area, 

the Chesapeake Bay. Too much nitrogen deposition in the Bay leads to eutrophication, 

a process that causes an accelerated growth of algae, leading to oxygen depletion. 

Garrett Hardin identified the problem with pollution control in the ''Tragedy of the 

Commons": 

He said:" ... In a reverse way, the tragedy of the commons reappears in problems of 

pollution. Here it is not a question of taking something out of the commons, but of 

putting something in--sewage, or chemical, radioactive, and heat wastes into water; 

noxious and dangerous fumes into the air .... The rational man finds that his share of the 

cost of the wastes he discharges into the commons is less than the cost of purifying his 

wastes before releasing them. Since this is true for everyone, we are locked into a 

system of "fouling our own nest,, so long as we behave only as independent, rational, 

free-enterprisers," (Tragedy of the Commons, Garrett Hardin). 

That is why we must look to the State to act in ways that protect all of us - we all live in 

the "commons." Please recognize the unacceptable costs in ill health and habitat 

destruction that occur from ozone; please use your authority to require significant 

reductions In NOx from coal-fired power plants. 

july 19, 2013 

Mary Jane Rutkowski 

Maryland Department of the Environment 

Air and Radiation Management Administration 

1800 Washington Boulevard, Suite 730 

Baltimore, MD, 21230 

RE: Comments of the Sierra Club Regarding Baltimore Serious Nonattainment Area 0.08 

ppm 8-Hour Ozone State Implementation Plan 

My name is Diane Brown and I am an intern at the Maryland Chapter of the Sierra Club. I'm a 

second year college student at the University of Vermont. This interests me because this impacts 

my daily life as well as the life of my friends and family. 

just this week there have been a few Code Orange days including today. People in sensitive 

groups, like myseiL are advised to stay inside. But people still need to function. I still need to 

walk my dog, walk to my car to drive to my internship, and other .simple daily things that require 

me to go outside. 

When people who are not part of the at risk group go outside, they might complain about how 

hot it is and say that its humid. But as an asthmatic, I have a little more to think about. When I go 

outside even just to walk my dog or go out to the car, there is this element of fear in my mind. 

Fear that each breath is getting shorter and shorter. Fear that I can suddenly go into an asthma 

attack. Fear that walking too fast or heing outside for just a minute too long, will he my ticket to 

the hospital. 

According to the American Lung Association, I am one of the 175,015 adult asthmatics here in 

Baltimore that fear every day during the summer months. This fear and this danger are only 

there when the air quality is so poor like it has been in the summers in Maryland lately. And can 

only remain and increase unless we regulate all the sources polluting ozone. 

I'm not ok with the fact that I can't be a part of the summer activities that made up my summer. I 

can't go to the pool, I can't go to the park, I can't go kayaking, I can't ride my bike I can't take a 

trip down to the Raltimore harbor. It's risky for me and for the young ... the elderly. It's not 

healthy for anyone really. 

Reing an asthmatic and just a breathing organism I care about the air. The MDE should he doing 

everything in their power to reduce these dangerous days of code oranges and worse. I urge 

you today to not just rehash the existing regulations, which is continuing to fail achievable safe 

ozone levels. Set new standards to address the major in-state sources of ozone-forming 

pollutants. Why is it that Baltimore area coal plants are still lacking state-of-the-art conti'Ols for 

NOx? 

I urge you, MD F. to protect the health of residents of the Baltimore area by imposing health 

protective emission limits on NOx from the Baltimore area coal plants. 

INTERFAITH of ower (X.Light 

Good morning, I'm Chiquita Younger from Interfaith Power & Light I live in Cockeysville and 

attend Unity Fellowship Church of Baltimore. 

Through Interfaith Power & Light, Baltimore churches and synagogues and other religious 

communities across the Baltimore area are coming together to save energy, support clean energy and 

take action on climate change. Homewood Friends Meeting has even installed solar panels! 

Why are good folks in Baltimore's religious communities concerned about the pollution that the 

Crane and Wagner coal-fired power plants are putting into the air? We're concerned because all of our 

religious traditions teach us to care for our neighbors. It's not right to allow air pollution to make 

people in our communities sick, or to keep people inside for days at a time every summer. 

And our religious traditions to teach us to care for "the least of these" - that we must pay 

attention to the needs of the most vulnerable members of our community. It is children and the 

elderly that suffer most from our failure to put modern pollution controls on the Crane and Wagner coal 

plants. When 1 was younger, in the summer time I loved ~ playing outside. 1 don't think it's fair that my 

son cannot enjoy a summer day, because the air is unhealthy to breath. And for decades, we have unfairly 

imposed the health burdens of coal-fired power plants on poor communities and communities of color. 

Sometimes we are told that getting our electricity from coal-fired power plants like Crane and 

Wagner is "cheap"; but dirty energy isn't cheap. It Is Intolerably expensive. We pay those costs with our 

health; we pay with damage to our climate; we pay by experiencing more storms like Sandy and extreme 

heat. 

Please commit today to addressing the air pollution from the Crane and Wagner plants. Please 

issue a stronger plan to protect all of us from dangerous air pollution. 

Chiquita Younger 

ProgramAssociate@gwipl.org 

July 19, 2013 

Ruth White 

8945 Footed Ridge, Columbia Md 21045 

Comments for MDE hearing- Baltimore Serious Nonattainment Ozone State Implementation Plan 

I understand that coal plants are a major source of the ozone-forming pollutant, NOx. Several plants in 

the Baltimore area still lack state-of-the-art controls for Nox. These plants need to be heavily regulated 

and preferably shut down. 

I am concerned for all the children and elderly people and others affected by the ozone and other poor 

air quality that results from burning coal. 

Asthma runs in my family. My grandfather's cousin had severe asthma, as did my father. I had 

childhood asthma and some residual impact that still affects me as an adult. My daughter had severe 

childhood asthma and has it some still. She has infant son and we are hope and pray he doesn't develop 

asthma. My husband and 1 are over 65 and he has a heart condition so we are both an at risk 

population for the impacts of air pollution. 

Families should not have to worry about the health of their children or their older members, or those 

with lung or heart disease. We need strict coal plan emission limits on Nox to protect everyone's 

health! 

In addition, to affecting the health of many in our communities, pollution from burning is a heavy 

contributor to climate change. We need to be moving to solar and wind power for our electricity. 

7/19/13 MDE Nonattainrnent Ozone State Implementation Plan 

Vi -te ... •. ,J'.N t'D "'ev-..- 11 Cl11b Name: Doug Aus; Home: Towson, MD c ""vt 1e "" ..- 1 '1 1'\ "t;. 

As one of more than 175,000 adult asthmatics living in the Baltimore area, I am here today to voice my 

support to strengthen the Maryland Department of the Environment's Non attainment Ozone State 

Implementation Plan. I specifically want to see nitrogen oxide emissions limits on Baltimore area coal 

plants, specifically the Crane and Wagner power plants. When nitrogen oxide reacts with sunlight, it 

forms excessive ground-level ozone and spreads over the Baltimore area, which aggravates my asthma. 

I have brought my inhaler with me today. I most often use it when I a~ the City . .. , 

This ozone pollution does not only harm our air. The Chesapeake Bay also suffers from nitrogen oxide 

pollutants that form ozone. It accelerates the growth of algae in the Bay, hindering the growth of 

aquatic vegetation in it and depleting it of oxygen. 

Most cities in the Eastern part of the U.S. have already complied with standards established by the 

Environmental Protection Agency in 1997. When compared to neighboring cities, Baltimore has some of 

the worst air quality on the East Coast. last year, the Baltimore metropolitan area had 22 code orange 

or red alerts. It is inadequate to simply continue existing standards, which do nothing to address 

pollution from the Crane and Wagner power plants. I urge the Maryland Department of the 

Environment to protect the health of Baltimore area residents by imposing emissions limits that force 

Baltimore area coal plants to install state-of-the-art controls for nitrogen oxide. 

\'rf\ Sk~~tt &rek>t~~ 1 o ~~~ l~Vh wi'Hit -{}u. evV&t otu~"4 tvlvir1>~mk'-"-'W 

Ut t\) (JtV'K' ;tW). 

Thank you lix the opportunity In comment on Maryland's plan to address ozone pollution 

in th.:: Baltin:ore area. 1. ur ~ the lviD[ l.o adopt str cnt regulations ~n order to pt;l!t;_~l~ 

tlw lu.:alth of Maryland·s ctt1ZCiiS as well ·1s then· envtronmcnt. MDE s proposed SIP ts 

not adequate to avoid harm to tht.: pubbt:. and additional limits and controls are necessary. 

Ozone has major health impacts ii1r residents, both children and adults, in the Baltimore 

area. Exposure to ozone can lead lo chronic adverse effects on lung development in 

children rrom I O-iQ years old. h;r adu lts. ozone aggravates lung diseases, and reduced 

lung function is a strong risk factor li>r complications und death during adulthood. The 

MDE needs to m eet its ohligation to Maryland's dtizcns to protect the public fi·om 

lmm-.i'ui air poilu: ion, and pcda:iy the citizen:; in l3altimorc's non-attainment area who 

sun i.~r fmm rat<.s t'lf <.sthtnu 11igl11.Y ·, IIJn th e. national avcmgc. 

In addition 10 the illlJlOitallt l~cat on :.; the pn1)10SCd SIP has for the peqpk or 

Maryland, ozone pollution has tkvaslming impacts on Maryland's environment. 

Approximately or,l.. third of' the nitr g~n t:wt reaches me ~.: c Bay come~ ti·l)ln 

atn1uspilcrit.. deposition. ar,c; 60% of th.1t itrog~n is attributable to nitrogen oxHics, un 

o;;:l:r.e precursor emitted hy ar~.; nnd coal plants. This L!Xccss nttrogcn causes 

cutrv1)hication <md dcpletit)i1 or" ill<.: •.JXygci·, in the water, and adversely impacts the hculth, 

rcpmcluctinn, ar,d ;.;ui"V ival nr aqua,; c ;ik. 

({\~\OJA.o:~ ovv~~)l>~ Slf \S V\01 t..t-1'-f ic.t~vd +o mee-t tkl. 11tedJ o-f ttu ~I.Li?UL ~~VJINJ-1 The U<ill:i.-rt(lrc Non-attaim.lent /, ·ca sttH iacks 21) 'century po llution control technology~ 1-U et-l 

t(Jr its coal-hurning power plan .s. which an.: a major source of nitrogen oxid<.,'S. For the 

prc.li.:\..l'oon or'tht.. pulJI it.: and th~ c:; ·• T,.,.-,111 t.:lit. lv1 U ~ has the authuriLy to require 

signdicant i.to1d IICl:u..:d n:ducti\>n:; in lilli\J:O.:l.ll oxalc~ trorn these coal plait;. Maryland's 

Heaithy Ai1 Act was an 1111 1)\.,rlanl step n tli~ nght <lin:dion, hul docs not go t.u- cnnugh 

in <h:hi.:Nir,g sat(; .:,.wnc levds. I ··(: pla·l l lllltaim; 110 proposHis t(u· ncw stamlaa b or 

rcglll<ltions to adllrc:;s tnaJOI in-!:t<t .. <.: :'I.Jul•·cs ofozllnc precursors. I urge Maryland to 

rcq tatrc ~imits fr.r C{1al p!WII.s ha ~.:.! on 'v'·lcJl is achicuthlc wtth selective catalytic 

rcd·tJ·;tion t SCI~)te~Y\~\t~ "\ ~6-t. t:t.rt- V'f\U~ltU'tiSVYI~ ~Wlj la.htt fuy rY)Dl:; 'fv 

evt>1.tre t\.Vt ~tteqllttt..e reAMLiiOII ivt DWU. ~lluhbvt ~ pvOtet-t 1V\.o tJ~lu .. W\c\ -1\lu -t;lt\t\/Wbf\Mt~t\ ~ v\t#,vM{rJ tAM f\)\\\)WtMJ 6{\~ ~'MOt. ~e\_ 

~ \.llrt. -\NAt ~\Ml\) \11\ -\\.u 61 t> . 1liwt ~ ~ 04 . 

Thomas Ru;harcls 

rich; rdsthomasj@gmai l.cnn1 

My nne is Tom Richai·ds I '11 • ial\ i:ludcnt at American University, and a legal intern 

with the Siern1 Club's Env!rolll ' 1~:~11.< w l'rogram. 

? be t~cAk J c v-f Y' , -

The :·clcvant ozone NAAQS ww; pronui!gatcd in 1997, sixteen years ago. Six1ccn years 

later, and tivc years atlcr the prumulga1ion of the 200H ozone NAAQS, Baltim< re has 1 ) I I f 

still hiled to mccl the national st:mdard . As it slaiH is. the Baltimore area will he \r' .,. g te o-E1Ta '""'~ b7 

reel< ~sil icd as a ··severe·· no atl:ti lrtlt ~! 1 ::n:aA~ct tl'c standar&1lp'.Atl1C 

attai11111ont date " f.l unc 15, 2ll l3t ~ J"'l",fue; ( ,;~.rr.,( ,~, T ~<: ~ Sj. Y 

I am roublcd by the ncgal i' e ~~on at:-:)r of vi g~~ Balt ~~t~~~lassi ficd as a 

"~•:' ·:·e'' nondlt ir"n~ ll\ :trc '· l'i'.: ~·:mti.· ...• ~<-1 tliilurc to meet the 1997 standan.l:; iS lirst and 

ti.Hc to..:t J <~isscr v. e tu the P'-' ):•!·: o!' ;J, ,(imon; - to their health, to their coml()rt, and to 

J~ ~~~:~ "c~~~di~~t I\this;~lu~ Ly. V~'y f1\ ~"- C ~~Y• 1:> 0;.\,m! and rdat~ particle,.; lro , '· l•~ •H ~ aJu vchic1:s seep into water sollrccs and 

di:-;n ,t trmlidomal uquatil.: li ""· · 1 .; :; d' MaryLmd is defined hy its wutcnvct:fS. 

P;,rl ,lly hec,msr: .. It' 11ilrogt- . l 1 I , •!~.;n kc Bay, the gcographi<.: hcan ~..~fthc 

rcgi1 n .• s cor1tntn o1i<a.:c'l1 with~.: -., ;~ nn• •en and chemical particles whkh promote the 

gnn,rh ofalgac tll,tt blocks lht · 1 1 trll rcvcnts the Bay ti·om maintaining a healthy 

hljl r of ayuatic v . . ~et,uion , I • , ._,, : lcaJ,.; tn a (.kclinc in fish stocks, wilieb means 

lcs~ i~h lhr ,\I at ) .mer.:; sri·.· ~, , I I , , .;sociatcd d reels on tourism to ttiC Clh.:sapcakc \ t A\ 

B. y ,·,·,ust also lie w.lsldi.!Jc(y o{ S -1-r 0 ve ferr r#e \ e >S 1'hc 1,\eJ ~d A 0 L)"'/ ' n \~ 

There are several (;Oal plants in tl· 'grc ~ 1 Hahimorc area, all of which contribute to the ~} .f~M't on goi; 1~ l'•zonc polh;lion nne, Hte ~sot. : ,, efll.:<.:ts on ·wironmcnl and health. Haltimore I?! ' ~~ 

C1f1r!<;,. ha:-: ,wcr ~;. ,0\ }1, asth wi:i~-:. \\·l.t ,. a. , 1 , 1s nn ) • · tfy continued c:"~ c 'Ji {/";, 

}11,aU:t•.' ll. The Maryland s:,:· i'l1i i .I!'~ ' ,,d ... res.-. cmis~:ions li·mn coal power plants, with J<ri 

tiK l··:alliJ and t.:ofll.t'lllt uf ,\·!aryl .. o an' 1itilunrc re idcnt ~f>'t·...primary concern. 7! 

ferf-r.r 'is;. 1ao 10 ,

11 V e: ~"OJ "- V•J~fo.,.. t 

~ d 0'\i'\-0\ ~ tv~en") ~~vi . 

5}.x l-fen 

E_l 11 JI"OI \JG I, 

,' 

I was born and raised in Harford County Maryland and am currently a rising junior 

majoring in Biophysics at Johns Hopkins University. I've lived my entire life in Maryland 

and I've grown to love the city of Baltimore over the past few years I've attended 

school. So much so, that I want nothing more than to stay in the city once I graduate 

and soon after find a job here. While it was never a problem for me in Harford County, 

I've found that my minor asthma has gotten more serious over the past couple months 

of staying in the city and that I am getting shortness of breath much more frequently, 

even though much of my work is physical labor and I've biked to work almost every 

day. I'm only turning 20, so my age has nothing to do with It and I have started to 

think that it is the air in the city that is getting to me. Consequently, I honestly am 

worried that I can't stay in Baltimore after I graduate and live the healthy life I 

imagined for myself. I don't really have a strong relationship to anywhere in Maryland, 

so if the air in the city stays the way it is, I may not have a future in the state anymore. 

While I may be sounding like a hypochondriac, with a water treatment system inspired 

by a man who is named after a building many of my classmates have lived in (Abel 

Wolman) and urban green space sprouting up every week, I know that our city is a 

leader in water and a leader on the land. I am not afraid to get my hands in the dirt 

and take a drink of Baltimore City tap water afterwards, but I am afraid I can't keep 

doing that in the future if I have to breathe Baltimore's current air while I'm doing it. 

As a result, I am asking that our regulations for ozone are taken further than they have 

been in the past. Maryland's plan to address ozone is simply a rehash of Its existing 

regulations, which our inability to achieve safe ozone shows, are not sufficient. This 

week alone we have had three code orange days, coincidentally one of them being 

today. Baltimore has twice the state average mortality rate and one of the highest 

pediatric asthma hospitalization rate in the country. The plan contains no proposals for 

new standards or regulations to address the major in-state sources of ozone 

precursors. Since coal plants are a major source of the ozone-forming pollutant, 

Nitrogen oxides and several plants in the Baltimore area still lack state-of-the-art 

controls for nitrogen oxides, it is clear what needs to be done. The Maryland 

Department of the Environment should protect the health of the current and potential 

residents of the Baltimore area by establishing health protective emission limits on NOx 

from the Baltimore area coal plants. MOE has the authority it needs to require 

significant and needed reductions in NOx from these coal plants. 

Thank you for listening to me and I hope for our health and our future, that you will 

make the right decision. 
My	name	is	Tim	Whitehouse. I	am	the	Director	of	the	Chesapeake	Chapter	of	the	

Physicians	for	Social	Responsibility.

As	has	been	noted,	ozone	is	a	serious health	problem	in	the	Baltimore	area.	Ground	

level	ozone	contributes	to asthma,	emphysema,	bronchitis	and	other	diseases. Two	

of	my	three	children	suffer	from	asthma; one	has	very	serious	asthma	that	requires	

frequent	hospitalization.

The	Crane	and	Wagner	coal	plants	are	a	major	source	of	the ozone-forming	

pollutant,	NOx, in	the	Baltimore	area	and	a	serious	cause	of	respiratory	problems	in	

our	population. It	is	unacceptable	that	the	Crane	and	Wagner	plants do	not	have	

state	of	the	art pollution	controls that	are	increasingly	common	in	other	plants	

around	the	country.

The	PSR	Chespeake Chapter	calls	on	MDE	to	protect	the	public’s	health	by	imposing	

strict	health-protective	emission	limits	on	NOx from	these	two	coal	plants. We	ask	

MDE	to	directly	address	this	issue	in	the implementation	of	its	State	Implementation	

Plan	and	in	the	permits for	these	two	plants.

Also,	because	EPA	has	reclassified	Baltimore,	MD	as	a	“serious”	nonattainment	area,	

we	call	on	MDE	to	enhance	its	monitoring	of	air	quality	in	the	Baltimore	area.	

Thank	you	for	accepting	these	comments.
Avoiding a Train Wreck: 

Replacing Old Coal Plants 

with Energy Efficiency 

R. Neal Elliott, Rachel Gold, and Sara Hayes 

August 2011 

An ACEEE White Paper 

{!;) Amer•can Council for an Energy-Efficient Economy 

529 14111 Street, N.W., Suite 600, Washington, D.C. 20045 

(202) 507-4000 phone, (202) 429-2248 fax, aceee.org 
/\void nq a Train Wreck •L ACI I I 

Table 1. EPA Regulatory Actions Affecting Utility Coal Power Plants 

Cl•~n Atr Tr.M'I .. pon 

Rule 4c; AT~I 

(Succ•s.s.o"" IQ CA.IRI 

._I • I 

• I I 1 I .. .. I 

• 1 ~, • I .,., ' "' ' I 

I •' 

• • J • · 

trt.oto.rt.'ll rt&N P.,.or.u~ •'' e • .,., ....... ,,'U .. IR.-r,.__, 

_T•.c:'hl'\01&011" IBARTf • I • • ~ ·1 "1 

...U~tot'l .1fil AMI:tt+f'll.t A.r 

Qy

_ ·;:tt'llrv .St:il"'d.vo:s. .... os, 

- ) .... ,,.,, ..... "" . f': 

• J •.... • J 

j • • 

,, 1 • ·~• J 'I~· r-'~ 

I I' ... , , •• ,j • • 

I I I • tl .. 1 o I 1 •• f'•t 

', r ~., ... ,. r .... · .. , , .. . ... • 'll ~ '.... • • ,,, 

,- ... ,. . • I •• '•t•' 'h• .... -.fA' . II • I 

I~- . .. .. 

t l • • 

· .. - •' .. ~ ; ~ 1 I 

''I •• U • 

. ,. ,.. 

~ .... 4, .. ...... ·""• ... ,,. .,. 'I • _. 

,,,.,.. I Itt ·1 

• • " ' I • 

I I ... --J' ·••,t.. .. .. J '"' · t • L ,, ) . -'-

4 • • • ., 

Source. Black & Veatch 2010 

Aging Fleet 

Most of the coal-fired U.S. electric generation fleet was built between the 1950s and 1980s. These coal 

plants were originally designed to operate for 30 years, although through-life extension measures have 

enabled them to operate far longer than originally anticipated. The median coal generation plant was built 

in 1966, and most of the existing coal capacity is over 25 years old. with the last major additions occurring 

in 1980-1984 (Source Watch 2011 ). Unt1l recently. many of these older, smaller plants were exempted 

from provisions of the Clean Air Act. As a result. many of these plants have not been modernized or 

updated with current emissions control technologies (Hsu 2006). Many of these older plants have not 

seen the level of modernization investment that some of the newer plants have received. so that their cost 

of operation may be higher due to deferred maintenance. 

Utility Fuel Prices 

Compounding the challenges for electnc ut11it1es is the shift in the relative prices of coal and natural gas. 

During the 1990s and early part of 2000s, ut1ht1es 1n many regions made major Investments 1n new natural 

gas capac1ty (EIItott 2006). Because of restructurmg of the electric power industry. low gas pnces at the 

t1me and Improvements 1n gas power plant technology. some regions of the counlry saw substantial 

investments m natural gas f1re generatton (CRS 201 0) However, during the 2000s, natural gas pnces 

rose dramatically and exhtbited Significant volatility, which made it a less attractave eleclnc generation 

source. 

Dunng the latter part of the past decade, coal markets globalized and prices increased dramatrcally 

(Elliott 2006). During this same period. we saw the development of non-conventional natural gas 

resources in parttcular. shale gas that has resulted in a dramatic reduction 1n natural gas pnces rn North 

Amenca (MIT 2011 ). These lower and more stable pnces are projected to cont1nue rnto the foreseeable 

future (Habacivch 2011, Petak 2011) Because of 1ts low operatmg cost and low emissions relat1ve to 

coal. natural gas has again become a more attractive uttlity fuel even though lhe price of natural gas on a 

per Btu bas1s rema1ns somewhat hrgher than coal (see Ftgure 1 ). 
Avoiding a I r ;~ 11 Wreck ~;- ACI I I 

INTRODUCTION 

For the past century. America has relied upon coal-fired power plants as the primary source of electnc•ty 

generation. Updates to U.S. Environmental Protection Agency (EPA) regulations Wlll requ1re that 

investment be made in these plants to allow their cont1nued operation. These combined market conditions 

call 1nto question the economics of further investment in many of these older coal power plants to allow 

their continued operation. Additionally. 1n recenl years. coals cost advantage as a utility fuel has 

d1m1nished vvhen compared to natural gas. So. utililles are faced with the prospect of either investing to 

bring many coal power plants mto compliance w1th the updated environmental regulations. or investmg m 

new energy resources to meet customer electnc1ty needs. The potential costs of bnnging coal plants rnto 

compliance or replac1ng them with new. likely natural gas plants would result in significant increases in 

the price of electnc1ty Substantial uncertamty ex1sts about the costs the Industry could face. but est•mates 

for compliance mvestment costs range from $70-180 bill1on (Celebi et al. 2010). A number of utilities 

including Progress Energy Duke Energy. and Amencan Electric Power have already made 

announcements of planned retirements (Mufson 201 1: Wald 2009: Dayton Daily News 2011 ). 

Regardless of whether utilities opt to retrofit old power plants or build new ones. utilities and the1r 

customers are faced w1th the prospect of Increasing electnc rates to recover the cost of these new supply 

mvestments. Energy efficiency represents an altematrve resource that can replace a significant portton of 

the at-risk coal capacity at a fraction of the cost of supply-side Investments. Maximizing cost-effective 

investments in energy efficiency can help ensure adequate supplies of electricity wh1le containing the rate 

increases. In addition. energy efficiency investments made in the tndustrial sector can contribute to the 

modernization of our manufactunng sector. providrng rmportant benefits to local economies. 

SITUATIONAL ASSESSMENT 

A number of factors figure into a utility's decision about whether to retrofit or retire and replace an existing 

coal plant. The majorrty of the coal plants that may be affected by these factors are the older. more costly 

plants that generally are run a limited number of hours per year. 

Impact of EPA Utility Regulations 

EPA is proposing updates to at least six regulations affecting coal-fired power plants with compliance 

deadlines 1n the next seven years (see Table 1 ). The combined effects of these more strrngent 

regulations. rather than the effect of any single regulatton will affect mvestment decisions by utilities as to 

what course to take to meet customer electricity needs. 

1 

Various analyses have projected that between 6 000 and 65.000 MW of capacrty could be at nsk of 

closure in the near future as a result of the 1mpact of these regulatory changes. Posstble retirements of 

older power plants have raised concerns about the adequacy of supply rn some reg10ns of the country. 

primarily in the Midwest Southeast. and Mid-Atlantic reg1ons of the country (Tierney 2011 ). More recent 

analysis by ICF (2011) made after EPA had 1ssued more details on the proposed rules suggest the 

rmpact may not be a great as some Initially feared. w1lh ICF reducmg Its estrmates for closure from 50,000 

to 40.000 MW (SNL 2011 ). 

' World Resotlrces lnstrtule prowtes <1 good explarmtron of these r .1les on lhe1r Web s te 

!.!lfp W'.VI'i \' i~~IC!.:..:_c,•o.. '2S)J.D.' 1.~·_;5]~Jlll~.~ l!:'J.I!:_l!._!'lt. I !.!,VH.!!!_l~U~~I!• 11 lt'!Jtrld ht!b_.II!IJ•.!Y..!.U!J.!.I~.:J 
/\voulml a Train Wreck c 1\CI 1 I 

EXECUTIVE SUMMARY 

Changes in fossil fuel markets and updates to environmental regulations are put11ng increased pressure 

on the competitiveness of extstmg coal-fired electric power plants. These changes put on the order of 

40.000 megawatts of coal-f1red electric generation at risk of retirement. This capacity is primarily located 

in the Ohio Valley. Upper Midwest, Mid-Atlantic. and Southeast where coal is the dominant generatton 

fuel. Most of these umts are older. less-used plants rather than the more modern untts that have already 

had thetr emtssions control systems upgraded. 

Whether these coal plants are retired and replaced. or have additional environmental measures installed 

to bring them into compliance with updated regulattons. utilitjes will need to make a Significant investment 

These investments will raise electncily rates for customers In many affected markets. electnc rates are 

projected to increase by more than 20 percent tn the next few years 

An alternative to these supply-side investments would be to look at customer-s1de investments in energy 

efficiency to replace th s capacity. in parttcular. combined heat and power (CHP) and waste energy 

recovery. Energy efficiency and CHP are typtcany less expensive energy resources than coal power 

plant retrofits or construction of new natural gas generation As a result. impacts on electricity rates 

would be minimized. benefiting all utility customers. w1th many customers having the added benefit of 

seeing their energy bills decline as their consumpt on declines. Moreover. thts strategy of using energy 

efficiency to enable retirement of older coal plants would help reduce the risk of future costs likely to be 

tncurred by coal-f1red electricity generation. such as a cost for carbon emissions. 

A key target for these energy efftctency investments should be large energy consumers, particularly 

manufacturing firms. many of whom are potsed to make major new capital capacity mvestments in thelf 

facilities as the economy recovers and demand for manufactured products tncreases. These investments 

in manufactunng have the added benefit of modernizmg energy-using infrastructure in ways that offer 

add1t1onal local economic benefits of job creation and enhanced environmental compliance of the 

manufactunng facilities. 

Unfortunately. while customer-side investments represent a least-cost path for maintaining electricity 

supply requirements. current utility regulatory and bustness models do not encourage utilities to make 

these investments. To realize the full economic benefits of energy effiCiency will requ1re a change in the 

utility regulatory business model to encourage utilities to shift a large portion of their investments from the 

supply-side to the demand-side. This shift will require changes that encourage utilities to invest ratepayer 

funds in the demand-side and allow them to earn a preferred return on these Investments. If these 

pohctes are put in place. customers will benefit from lower electricity rates and a more vibrant local 

economy with more jobs. while electricity utilities will be motivated to become energy efftciency suppliers. 

not just electricity suppliers. 

It has often been observed that crisis and opportunity are inextricably linked. as a cnsis encourages us to 

push the envelope of innovation and accomplish feats we didn't think we were capable of. The so-called 

"coal train wreck" may afford just such an opportunity to modernize our electric utility regulations to reflect 

a new century of different economic and energy markets. creating opportunities for the utility industry to 

define a new path to sustained profitability by selling efficiency services not just electncity, wh le ensunng 

reliable and affordable power to their customers. 

ACKNOWLEDGMENTS 

The authors express their appreciation to the numerous individuals who have shared information and 

insights that have formed the tdeas expressed in this white paper. They also express appreciation to their 

ACEEE colleagues who have reviewed and edited it. 

Please note that co-author Rachel Gold. formerly with ACEEE. is now wtth OPower. 
/\vutd nq a Tratn Wreck ·• /\( :1 I I 

t • ,o l 

Figure 2. "At Risk" Coal Generation by Region 

? 

\ 

Source. ICF 2010 

. ( \\ 

Table 2. Forecasted Capacity at Risk by Region 

Percentage of 

Total Summer 

Capacity at Total Summer Capacity at 

State Risk Capacity Risk 

llhnots. lndtana 

Ohio. Michigan, 25GW 152 GW 16.4% 

WISCOnSin 

Alabama 

Kentucky 11 GW 88GW 12.5% MISSiSSippi, 

Tennessee 

Delaware. 

Flonda. Georg1a 

l\1arytand, North 

and South 5GW 201 GW 2.5% 

Carolina. 

Virg1nia . West 

Virgina 

Iowa. Kansas. 

M nnesota. 

Missoun. SGW 77GW 6.5% Nebraska. North 

and South 

Dakota 

Pennsylvania. 

New York. New 3GW 103GW 2 9'k 

Jersey 

Source: capac1ty at nsk-ICF 2010; summer capac1ty-EIA 2010 

- .> • 
Avoiding a Iran Wreck. ~) I ~ 

ROLE FOR ENERGY EFFICIENCY 

Energy efficiency represents a low-cost energy resource that could be called upon to meet a significant 

portion. if not all. of the electricity capacity that could be lost due to coal plant closures. Significant energy 

efficiency resources are available in the at-risk states These resources are less expens1ve than 

investments required to bnng ex1sting coal plants 1nto compl1ance or to construct new generatton 

capacity. and can be deployed much more quickly As a result. including efficiency as pari of the utthly 

resource plans for at-risk states will mimm1ze the costs of meet1ng future electnc1ty needs 

Deploying Efficiency Resources Costs Less than Building New Coal Plants 

Energy efficiency has proven to be a least-cost resource when compared w1th new generation capactty 

and is the cheapest option for meeting our additional capac1ty needs. ACEEE's research has found that 

the average cost to a ut1lity for energy efficiency measures is 2.5 cents per kWh, in comparison to new 

generation sources. which can range from 6 to 15 cents per kWh (see Figure 3) (Fnednch et. al. 2009: 

Lazard 2009) 

Figure 3. Levelized Utility Cost of New Electncily Resources 

20 

18 

16 

:;: 

3': 

.>< 14 .. 

c.. 

.. 

'! 12 ., 

::!.. 

~ 10 0 

u 

... 

.. 8 . !::! 

'ii 

> 

.. 6 ..,j 

r 

0 

.. 

"' .$ 

1i 

0: 

2 

0 

En~rgy Wtnd Biom.us Natur11l G.1s Pulveril "'d Nuclear Co01IIGCC Sol:~r PV 

Elfocoency• Comboned Coal' 

Cycle 

Nnll!s I llt!I!JY I!IIK ·t·nt y nvt l<i!JI' ~ltltj'ar•t pu!llll•m tlnlnlllMil I rtt:drlt h 1'1 ,, ,I;Jl)IJ (/\CI I I ) nli ollu:r tlnla hrm I ill <ltd )00!• II~J il 

Pr d rnnqe of i1dvanr.ec1 p wvPfl/ f!c1 f0.1 l.rc1P<. fr ~ t llrhOn rapi.I'P <11'10 romprP.S~ On. 

In particular. energy efficiency Investments in manufacturing. Including combtned heat and power (CHP) 

and recovered waste heat are among the lowest cost efficiency resources (Chittum, Elliott & Kaufman 

2009). Investment in manufacturing has the added benefit of modernizing manufacturing plants. 

Improving their global competitiveness and reducmg their cost of complytng \vith future industrial air 

quality regulations. U.S. manufacturing is poised to enter a period of major capital investment to 

modernize its capacity ( BCG 2011 ). which it will need to rem a en globally competitive. A significant share 

of U.S. manufacturing is located in the states that are likely to face retirement of existing coal capacity. By 

directing some utilety energy efficiency investments into manufactunng modernization. the U.S. can 

maximize the economic impact of these dollars. 

States and localities that invest in efficiency profit from a range of secondary economic benefits as well. 

Energy efficiency investments directly reduce utility bins and operating costs for consumers. Thts 

effectively reduces dollars spent for the purchase of fuel and the costs of operating a coal plant. and 
/\votd II!J a Train Wreck " /\CI I I 

redirects those dollars mto new jobs in other sectors of the local economy. Most of these sectors create 

more local jobs than the fossil-fueled electnc generatmg sector where significant dollars flow out of the 

local economy (Laitner et al. 201 0) In addttion uttllzing energy efftciency resources to enable the 

retirement of older coal plants helps reduce nsk by stgmftcantly reductng the amount of future costs that 

ratepayers would face if a policy to tmpose a cost for carbon em1sstons was enacted. 

Efficiency Can Meet Forecasted Capacity Shortfalls 

Energy efficiency is a vast. untapped energy resource in the U.S. This resource can be used to meet the 

forecasted generation capacity shortfall. Many ut1ht1es are already factoring energy efficiency into their 

planning (Harris 2011; TVA 2011 ). and energy efficiency is recognized as a strategy for meeting capacity 

challenges in many of the analyses predicting the retirement of coal plants. Proactive management of 

energy efficiency (and "smart gnd") resources have been advanced as solutions that can ensure that 

electnc reliability will not be compromised. One such analysis estimated that by 2018 new energy 

efficiency programs could decrease summer peak capacity demand by 20,000 MW of the 40.000 MW that 

may be needed (Bradley et al. 2010; NERC 2009). An ACEEE meta-analysis of 48 studies on the 

potential for energy efficiency in the U.S. indicates that given the nght choices and investments. the U.S. 

could cost-effectively reduce energy consumption by 20 to 30% or more over the course of the next 20 

years (Laitner and McKinney 2008). 

Energy efficiency potential studies m a number of the at-nsk states indicate a large amount of available 

energy efficiency. The Southeast Energy EffiCiency Alliance (SEEA) analyzed the cost-effective energy 

efficiency potential for many of the at-risk states includtng all of West Virginia and parts of Alabama. 

Georgia. Kentucky. Maryland, Mississippi. New York, North Carolina. Ohio. Pennsylvania. South Carolina. 

Tennessee. and Virginia. The analysts covered four end-use sectors (residential. industrial, commercial. 

and transportation) and three fuel types (electricity. natural gas and fuel oil). SEEA projected that the 

measures included in its study would avoid the need for approximately 60.000 MW of new capacity in the 

southern United States by 2030 (Brown 201 0). 

ACEEE has conducted state-specific studies of efficiency potential in a number of the at-risk states and 

found substantial opportunities to meet capacity needs with efficiency. In Ohio. cost-effective efficiency 

policies could reduce capacity needs by nearly 1.500 MW by 2015 and 7 600 MW by 2025 (ACEEE 

2009). In Pennsylvania, the story is even better. By 2015 the state could cost-effectively reduce capacity 

needs by over 5.000 MW ramping up to approximately 20.000 MW by 2025 (Eidndge et al. 2009). 

The untapped potential for increased efficiency savings is massive. with the proJected range of available 

efficiency consistently falling within (or exceeding) the range of estimated capacity needed to address 

forecasted coal retirement. Many at-risk states have only just begun to take advantage of this resource. 

and there are a number of cost-effective policies these states can adopt now that will avoid constrained 

capacity and high electricity prices. 

The states and regions most at risk are already engaged in some energy efficiency programs. with more 

efforts in some states than others. Table 2 lists states that are most "at-risk'' for coal power plant 

rettrement. All of the at-risk states are already meeting some capaci1y needs with energy efficiency. 

However. the savings being realized represent only a fraction of the available. cost-effective resource 

(Molina et. at. 2010). 

Of the at-risk states. nine have an Energy Efficiency Resource Standard (EERS), which establishes 

targets for energy efficiency savings for the utilities in the state. These savings are targets and 

requirements by state legislatures and utility commissions that wtll requtre Investment in energy eff1c1ency 

programs by utilities. The savings from those programs are commitments from states and utilities that wtll 

help to meet capacity shortfalls. ACEEE's recent report on EERS performance has found that states with 

an EERS are achieving significant energy efficiency savings from utility programs. reducing strains on the 

utihty grid. Overall. most states are meeting or are on track to meet energy sav1ng goals. Thirteen of the 

twenty states with EERS policies in place for over two years are achieving 100% or more of their goals. 

three states are achieving over 90% of their goals, and only three states are realiZing savings below 80% 

fi 
SEE C0\-1,\R ~(d 1 2- a t ltHp "\\" .d~d ~-•t.: nul11-. u 11 11.n ~• btlll..: ~ h.tph:l-. ·:(._ Clt<tpk r-. .llf ul i:Su!Jtitl..: l l 

lur OFFICI:\ I. COPY- NOT Ol'FICI:\1. n X r 

C'hnlk Point L"nit 1 503 ton" 

C'lmlk Point t:nit :! 5~~ ton~ 

Dickerson Cnit l :!~-ton

Dickero;ou l"nit :: ::., .l ton" 

Dickerson l"nit 3 25910ib 

H.A. Wagner Cnit :: 2291011!> 

H.A. \Vnguer L'nit -~ ..tS 1 ton, 

i\ lorg:mtown l" nit I S6S ton., 

:\ loqwntown t.: nit :: Sfi~ lOll'-

R. Pnul Smith t;nit 3 ::::to ~ 

R. Pmll Smith Unit ..t ItS ton, 

Tot:~l "' .. ~,:; lOll " 

(<i) .\11 c:wccdallc.: of the l\0, lituitatiou, in B( I) ur ((>) oftlu~ H! ulatum 

\\ h id1 IM.:t.:tu -. hccauo;c PJI\ I lukn:om~c.:ctiun. 1.1. C or a ,uc.:c ...... ur iud..:p.:udcul ... ~ ... tcm up..: I .thll .-tch In 

Ill\ oke '\! t~innuu En~c!rgeuc y Generation''- ''Load Redttcllou''. "\"oil age: Reduclton·•_ "L'mtmlnumt of-:\oue ... seull<tl Bmltln1!! l u:id''. nr "!\ lauu<tl l.u<t1l D11111p" prm:.:tlmes iu a.:.:nnla11t.:c \\ ilh the euncut P J \ I 1\ lmuml. 

nr rl PJ\1 alell ptct.:elilll!! "nch acllnll;h In a )!ellerilhll!! unittl1a1 has kutpuranly ~hnl 1ln\\ll 111 m de1 to 

a\ uul putentml mten up11o11 111 electric ~.:n 11:.: and ntaiutam d.:ctric ,y-;t.:rn reh;tlnlity ,.., not ~ \ rotation of 

tlu ... d 1<4plc• Jill I\ ul...'d thai: 

{1) \\'1thin .Hi hum, lilllo\\111!!. 1111.: <lt.:llllll. th-: II\\ ncr nt operiltur of the 

a fleeted clcc!Jic )!CIIcr.tlin!! 111111 m rnuts uohli c-; th.: 1\l<tua!lcJ nf the ..\ir Qn;11il) Cornplimu.:c Pw!!mlll ol 

tho:: .1ction ,,,ken b~ P J:'\·1 Iut.:rcmUJeciJon ami pro\ 1de" the: D<!p:u1meut \\ ith tlocumentahon of the acllun 

\\Inch t!-. .,,,!J..,JilctuJ y to thc I >cp;u lmenl. 

{ii) \\'llhiu IX hmu ' :d iet cutuplcllllll nf the ••cliuu. tl1e n\\ 11.:r or 

upctahn ufthc affected 11111t or uuih pnl\ 1dc, the l>cp;UIIII<:lll \\llh the estimated NO, e111i~siuu" iu exec~~ 

ol the .:mi""ton linutahon: and 

(iti) '\:ot lntc:• tlwu Dec.:mbet _; I ofth.: y.::u 111 \\hidt the emi .. .,iou 

lumto~ lluu i~ exccc!bl. the o\\ n.:1 ur upcl <~ hn ulth~.: .tlk ct..:d cncr lm;.: 111111 m 11111h h ,m.,fct-. tu the 

;\ lal) ud l·m trutmtcul al Suneutlcr :\cnlllnl. utnuc -.ca,on ,0, allmuntcc-; t:IJIII\ ;ih:nl 111 munhcr to the 

ton~ oJ ~0~ .:utitt<:d 111 exec:,., of the enu .. ion linnt.lllou 111 B( -1) or (6 ). ;h applicable. 

(b) The owner 01 oper,IIOt of ;lJI d.:ctn c J!:ener,•timt \IIIli or <sY'>Iem. a, 

apphcahle. -;hall .;~:till wnllcu 11oln:c tu the \l.lllil!-!0.:1 of the :\ 11 Qnaht) Cumphauce l'rm!l'i1111 uut later th:lll <i 

IJt iiiC:: ., day, foliO\\ mg the tiny \\ h.:n the ctnuult~t ~ uzoue '>~11 '> 011 ~u, ciiii'>'>IOII' of :m d.:ctnc g.euer;'l llll~ 

umt or ,y·~tern. <h npplicaiJI.!. nrc 

(i) Equal to app10xim td~ SU J>t!rceut of th.: applit:abl.: ozoue s.:.~.,.uu 

cuu~~t<lll hwitalu>ll. ,ual 

(il) h [llill W the applic.thlc ntunc --.e,...,uu .:uuo;--.!UII lntlilaliuu . 

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';II C0:\·1.\R :!C. II :::- a11t111 ,, " ' d,d .. tak lli<Ll ~olll. :,uhllll..: ~h.lph:t' :!(•_Cilal'k " lumf:Stthlttkll 

lur OH ICI. \ 1. COPY NO'I 01 I I( 1:\1. 1'1:::\T 

(', S(), illliS'iiUJI I.liJIIIilliOib 

(I) I xccpl a-. put\ ~tic. I an I uf tlu ~ ll.'!!lllatiuu. aunual SO . Clll ~'Juu:. hu111 c;u:h .1flcclcd 

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(:!) :\111ma l I umm:.t..: I.inutatin11,.,. 

Annual SO_ Tmuaage nnii<~IIOib nllllll.!>l 

.1 rmuary I. :! 0 I 0 Jmmnry I. :::o 13 

Brandon Shore<. t nil I - .0-11 ton;, ~ . .19:! ton-. 

Bl'<~mlon Shore-. l"nil : -3-1- lOll'> ".6:::- toll-. 

C.P. C'mne Cmt I :!.000 ton, 1. :. :: lou:. 

C.P. C'mne t:nit :! ::.1..1 9ton" 1.6-1(, ton• 

Chalk Poml t; nit I 3.-1 03 lOll'> :!.606 lOll'> 

Chalk Point l" nu 1 3. c; r,s ton, ~.- ..:; ;ton~ 

Dicker<>on lnit I J.(ll(, lOll!-. 1.:!, ~ ton~ 

D1cker~on Cmt :! 1.--o ton ~ 1.3 c; ~ ton, 

Dickel"•on l "nit .\ l.t"i-s ton-. I.:!S~ ton" 

H .. -\. \\'012lh!l' Lnit :! l.<l IS ton' 1.:!3'> fOih 

H.A. \\'a ner t:nit 3 3.:!5:! ton~ :!A90 ton" 

l\ lorg;~nto\\ u l lnit I r..l OS ton~ .u; -s ton'-

:\ lon~anlo\\ 11 l 'nil :! 6,0(,(, ton<. -t6 (, ton ~ 

R. Paul Snnth Unit 3 161 Oll~ I :!-I loth 

R. Pmtl Snuth llnit .I f;.j I lOll'- t"i.J .I ton .. 

Tot."'l .JS.o Is ton' _;-_ _;Jc; IOib 

D. \lci'CIII') I tu ~·mm l.illlit.tlltliK 

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cullin;! with the I :!-UIIllllh pcriud hc~unain~ Dccclllhct I . .::!0 I:: lin nu)IJ, Nm cmhl.'r 30. :!0 I ' · cad a Hlh:t.:lcd 

t:1cility halluhzt!l a I :!-month rollin!t a\·eragc n:ulo\'<11 eftic•c:ncy fm men:my of at lcll l ::>0 pt!I'Ct:lll . 

(:!) Fm the I:! month-> beginning .lanu;uy 1. :!OU ;md th.:~t:aft.:r. each aUeckd f<Kihl) 

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dl!lc:nniued in m:conlanc.: \\'ith Rcgttlat1ou .O.J of llu-. chaptc:r. 

E. sy .. t.:m-wide Cumplimii:C Dt:h!lllllllilllUII'>. 

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lm OH ICI. \I. COPY NO I O il 1('1. \I. I EX r 

t I) Cumpliauc.: with th.: .:111i~~iun lituitatiuu' in *~ B mad C nl thi~ 1\:;mlatiun Ill<' ~ hc 

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{::!} ,\ l>ysh.:lll· \\ td..: cmuphauc.: d.:t.:nuiuHiiuu ~ho~ll hc h.1:-~:tl uul ~ upuu cmi.,~iuu ... lnuu 

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{ i) ( f rl 1111it th.tt 1-. pari uf a !.~ -;tclll IS II it II ~ ).:rrcd In a diJ1..:J'CIIt JICI ' llll that dues UUt ll\\ II. 

upcr.ttc. l..:<t"!· m cuulrul ;111 all\!ctcd 111111 bjcd lu tin~ ~:haplcl lh.: t1a1hl~ncd nuit sh.tlllll..:ct th..: 

liuutahuu:- 111 (': Band C u f tln-; 1 ..:1111latiuu applic<ibl..: In that ..:h.:ctnc .:u..:ratl\1~ 111111. 

.04 Detea·mining the l\lercury Remo\'al :Efficiency for Affected 

F acUities . 

.-\. The procedme~ of ~§ B-F of thb rel!uliu ion hall he ll'>ed to demonc;tmte comJ)Iiance with the 

I :-month rollm~ ;wet"<tge remo\ a l e fficiency required for merctll') b) Reg:nlaHon .030 of rhi<; chnpter. Tite 

owner lll' operntor of nn ff~cted fnc ility ~hnllnotify the Department of the complinnce demonf>tmhon 

me1hod tl ha" elected from §*0 -F of tlu~ re nlahon on ot· before .I annal}' I. :!0 I 0. for the complinnce 

period that commence~ on that dnte nnd on or before Jnnii:U}' 1. :0 13. for the compliance period thnt 

conunence~ on that dale. The owner or operntor of ;m electric generating umt thai dect<. to demon<.lrale 

compliance\\ tth the required merctll')' remm·al efficiency hy meeting the ma!." ellli"'-JOil" limit:uion 111 ~F 

ofthi"> regulatwn !>hall utilize that '>ame method tor a ll other ele.:tric generntlllg llllth m the ~y;,tem. On.:e 

elected to r ench nffecled facthty or sy;,tem. m. :tpplicable. the option may not be changed during: the 

de"tf!nated compliance periocl. hut may he changed for the next comphance period. 

B. Deten ninllll'- :\·Ierctuy Content 111 Coni nnd :\Iercury Fhte Ga;, mi'>~ ion Rate!> for Ench 

.-\ft~ctecl EleciJ ic Generat ing t:nit. 

( 1) The 0\\ ner or opera lot of an dec II ic eneratm~ 1111it '>llbjectto thi;, regulation , hall. at 

lea<, I once each qum1er dmmf! a con ecllll\ e I S·month peraocl be umin~ not htter th:m Jnly I. ~oo . 

(a) Determme the meJ'C\11) content of the coal uh lized by ench affected mut 

u,;mp. ntestmethod npprm·ecl h) the Depm1ment. anrl 

(h) Conduct n comhmlion " te<.t to clelenu me the mercury emi,-,,;ion r:1k mlhe 

llue f!a;. ttp!-IJ'eam of i'lll) pollution controlmea, ure. mcludm~ fuelm..:rcmy heueficialion. 

(:) Comhthtiou Jl.:l!. te ~ and collection of co:tl <,;nnple-. to determine the mercmy 

content in co<1l ,;hall he performed on the "-11lh! clay or cli'l)'\. 

0) The mercm')' emi'-"ton rrtte in the flue !!a:- hi! II he l'epoated a'> ounces of mercury pet 

tnllion Btu heill mput. 

( -t) Combtt-tton p. ~ le lln~ ~h:~ ll he pet foamed tt.~in !l a te'-1 protocol i'l ppron~d h~ the 

Depattmenl. The te-.t protocol -.hall he ""bmmed lo the Depm1ment at ler~<.t -t ~ cL1)'' p1 ior to commencement 

of Je ~t1112.. 

t "') The 0\\ ner or operatm of an at feet eel electnc eneratin; unit 1-hall ,;uhnut to the 

Depmtment: 

(a) The re,;ult!> ofte h to cletennme the mercm: content of co<~l :mel merctU) 

emb<;ionmle in the flue .!!a;, upon receJpl ancl 

:-..0'1 OH ICJ..\1. II X'l Rl· \ IS ION ·" () 
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lmOI·FICI:\1. nwr- NOI Oil ICI.\1. ITXT 

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th..: c.:lc.:dn..: ,l!C.:IIL!I tthu;.: unit dunn;: the: p1..:\ tuns I() y.:;u-.. 

C. Dd..:mumu~ rite: Lncouhol!..:tl \lc.:n:m)' Hue Cias Bttsdiue lor ;ur AfJ;.:..:h!d hu:tlil) . 

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tc-.ls rcquirc.:d by ~B ol lhi ... re)!lllatiuu c.::o\pn:-.sctl it!> uuuccs 111:r trillinu Btu ho:<tl input 

{:!) Till: lllll:tlllhullcduh!ICIIry ha»dlltl.! euri~srmr rii!l.! 1m iHI aHi:ct..:tl fac1lit>· ... h.tll h..: 

deh:nuiucd al-. lhc hc.ll iupul \\ ctJ!htc.:t! a\ c1 a ~to: !If the enu .. ~i uu rttlc!'. li11 the cual-lucd clct.:t nc l.!CIIC.:I ttl1111! 

mnb ill lh..: alkd..:d lii..:ility d..:tcnumc.:d 111 accnnlaucl! \\ 11h *C( I) of this rc;;:nlahnu. 

l ') I he tllli:UUirnllcd mo:n:tuy ha-;chuc cmis.;iullr lc iu l!C( I) <~1111 (: ) ol tJtp, n:~:: nlahon 

~hall he llll!a,.,ur cd 11)1~11 eam ur iillpulhriJon coulmlmcao;mcs. iudutliu_!.! rclmell:\11~ hcudid.tl\1111. 

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II.!IJIIiJ.:tlm.:ll:\11') r..:mm·alenicrcucy i.; demtms r<~t.:d at .m alh:l:let! f<1cihl) \\hen the h..:.ll lll]llll \\ctj.dllcll 

m c:ragc: of I he! mt!rc.:ury cmi;,~ton ~ of all coal-tin:d dcctr ic gcnc: ratm~ IIIIth M the atfc:ct.:tl t:1ciltt). 

c.• let dilled ih ·• 1 :!-munth mllm_!.! <1\ cr.t):l.!. '"· 

(I) For the! I :!-mouth pct tod conuucncm~ on Janumy I. ::u Ill. not more lh.m ~0 p<!rceut 

ul' the m•cmttmlletluacn:ury Cllll'iSIUJI t<~k c"lahJi,.hetl pup,uanllu C uf thi.; IC!:!IIlaholl: ;uul 

(~) f or the I ::!-moulh pc:1 iod comm<!ncinll .lanumy I. ::!0 U ,uul th<!IC,,ft.:a. 1101 morc I han 

I 0 p..:r~.:cllt uf lire: 1mcnnrmllcd men:ury cn ~-; nn rate e"'tablishcd ptusuaul In C nl' rhi ~ rc:ml.thou, 

t I) ( "umpliaucc with th..: 1 equir..:•lmcr..:my rc.:mm al dficli.!IIC)' is achie\ ctl lm ill\ ttl tee ted 

litcility \\ hcn I he hcnt utpul weiglu.:d ,n·t!ragc of the lllt!n:ury <!lllbsion ntte~ of all coal-fitc:d dec ln..: 

!!l.!llcratmg mrirs alth..: alli:ctctll ll.:llily. mca ... urcd as 11 11-nluuth wlliu_!.! a\·cr.i:,tl!. dues uut c.:xt:cctllhc 

apphcabt.: t!llli~ .. iou ral<! lll ~!.: (::!)or thi ~ g.n)atioll. 

(::!) I mi.;-;illll Rat..:.;. 

Emr~~ on Li mil~ Ounce;. pe1· Trillion Bin Heal Inpnl Be~innin_!! 

..\fli:ct..:d Fa«:ility .Totll\1;11)' I. :o 10 J;unmry I. .:!0 1.' 

Brandon Shores ~I 10 

C'.P.Crane ."i IS 

C'lmlk Pomt ~0 20 

Dickerr.on ~s 19 

H.:\. \Vafl_ner :!:' I~ 

1\lon~antown 7 I~ 

R. Pant Smith ~:' IS 

F. Demon~tra!lll~ Compliance by :\·leering., .\·lt!I'Cl\1')' .\ as~ Emi~.,ionl'ap. 

. 7 Rl· \ IS ION <:!O 
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lnr UH ICI. \I. C<W\' NO l OFFICI:\ I. n:xr 

(I) Cumplmm.:o.: \\ tlh tho: H!t]tllh:tl mo.:n.:tn)' ro.:lllll\'ill o.:fhcto.:uc) 1., tlo.:tuuustr;tlo.:tl at .111 

an~clt.:ll r •• ciltl~ \\ ho.:ll tho.: 111 ·1.,., C.:llll'o'>IUII ... 1111!<1-.llh.:tl Ill (lllltllll!> as a I :::-IIIUIIIh lUi hill! JIO.:ItUd . du 1101 O.:XI.:t.:O.:d 

lho.: apphcahlc o.:tllh.;JmJiimih iu I(::::) of l)u.., ro.:;:.ttlalulll. 

mi~'> ton Limih Ponud, p~r Y ~nr B~ imting 

. \ fli.!ch:d l'<tcthly Jamtlll)' I. ::::010 January l. :o 13 

Brandon Shor~~ ~ (i. 

C. P. (. ran~ 26 u 

Chalk Poml lOS ;q 

Dicker~on -~ .... .: 

H.A W:-tg.ner 68 ., 

·"·' 

i\ lors~;mtm, n I::- ti(l 

R. Pmtl Smith I~ 

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.lpplicnblc: to tlwt aft.:ch:d titciht) :.hall bt: n!dnc.:d propot1iuuall~ ba,;.:J on I h.: r~ h\ e capacity. 111 

me~a\\0111". nf a ll the t:lo.:chic _!!ellent\111 ~ IUIIh at lito.: allo.:ckd lac !lily which mo.: Mthj..:t.:llu till' ro.:~nl i!wn. 

( ) In th.: .:\ ~ut tl1o1t <111 .:utir.: affl!ct.:u fac1lity '' 1thiu a ., ~ .. t.:m p~mt.tllcutly c~ ~.:., 

np.:r,tlluu. tho.: lutalmii'' o.:mt ...... IUII luuilalic•ll 111 ~I ~) uf I hi" lt:l!llh11luu ,JMII ho.: 1 educe; I h) tho.: 111.1,.~ 

.:111i~swn linutalum appltcahlc Inch..: llflo.:ch:tll,tcthly. 

l '\) I xco.:pl dill Ill;! p..:1111d-. ul 'l<ulup. 'huh in\\ 11. 11M I l'nnclinu u1 lllilllllo.:tJ.IIICC. the m 1 110:1 

Ill upo,;r,IIUJ ufau d..:ctnc :.:cuo.:r.11111)! 111111 shiill O.:lhlllO.: tiMI IIII:ICIIf ) CCIII!I'UIIIJ<:il,llll:' .ue Clllllllllllllhl) 

cmplo~ed un .::~ch 111111 aut! prop~l'l) mlJthkd till' optimal cuutrolt:~km!t wto COII!>Hlc!rahou til.: up.:r•um;;: 

CUIU hhnll,, 

.05 !\lonitoa·ing nnd Rcpm·ting l{cquh·cmcnts. 

A. Comphmtce \\ 11h the emi,, ton mitntion~ in thic. clt:Jpler 'hall he <l~mon<,lr:Jtecl \n th :1 

cntllinum" ..:1111"1"11 munilnl'lll)! "Y~Io.:111 that '" '' '"'" lied. npcralo.:d. mKI ccl·lltio.:tlm otccnnlmJce \\ 11h J() CFR 

Pari " "' . 

B. lkaunun;: \\ ath c.tlcutlar ycar :!00- <nld each yo.:;u lh!.!reaflcr. th~: uwn..:r nr "Jicr'ator ur each 

dcclnc ;!O:IIO.:r:JIIIIJ.! tunl , nh)o.:cr lu thi~ dtaptct !>hall ,.,tthnut ;m illlllllal rcpm1 to th..: J>..:parlluo.:ul. the 

Depm1ment of :\;uural Re.,ourc.:<.. :~nclthe Puhlic Sen 1ce C'onunt<.<.ion. The report fo1 e:~ch calencl:u year 

!.hall he .,nhnull..:tl nul htkl' th:tu \ l:u·dt l olthc li11lcm 111;: }car 

C'. Ench r~port !.hall include 

( 1) 1 ~,l<lll!. pcrJi,nu:mcc n:!-1111~ n:latc,\tn ClllllJlliancc \\ tlh !he cmi !> nu rcqtm·cmcut .. 

nn a hi~ c:hapter. 

(:::) I IJH<;-.iom. of:\Ox :tlld so~. ancl hc:!illlllll!! \\ tth c:tlcnclm year :ow. IIIO.:TCIII') • 

.::nunec\ clnrin~ the pre\'IOII!>. calendnr y~ r ti·om each affecteclunit. 

:'\0'1 OHICI.\1. II X J' 27 - ti Rl· \ IS ION :·:o 
Avoiding a lra111 Wreck r0 1\CI I ~ 

Figure 1. Historic and Projected Prices of Utility Steam Coal and Natural Gas 

10 

9 -+-Natural Gas 

8 

7 ::-Steam Coal 

6 

-. ~~---------------~~~~~~~~.-

4 

3 -------------------------------------------------

2 

1 

0 

Source: EIA 2010 

CAPACITY AT RISK FOR RETIREMENT 

Estimates of the total capacity of electric generation at risk for retirement range from 6.000 to 65.000 MW 

by 2015 (most of the studies have some overlap in the range of 25,000 to 35.000 MW) (Tierney 2011 ). 

Table 2 below describes one of the major study's projections of coal plant retirements by 2015. The 

capacity of power plants at nsk for retirement varies greatly by state. Some states in the South-Central. 

West. and Northeast made a major shift to natural gas during the past twenty years. In contrast. many 

states from the North-Central through the Midwest and into the Southeast rema1n dependent upon coal as 

a base-load fuel (CRS 2010). The potential impacts of complying with these new regulations fall 

predommantly on these coal-dominant states (see Figure 2). While significant natural gas capac1ty was 

constructed in these regions, it was overwhelmingly peaking capacity rather than intermediate or baseload combined cycle gas turbine (CCGT) facilities. As a result. many of these states are not in a position 

to shift to existing natural gas capacity, as can be done 1n other regions. 

Most of the at-risk plants lie in the Ohio Valley, Upper Midwest. Southeast. and Mid-Atlantic. as can be 

seen in Figure 2. which shows one of the medium-range estimates for capac1ty retirements. This pattern 

of possible closures is preserved across all the major stud1es reviewed in our research. Table 2 compares 

the forecasted capacity at risk with actual summer capacity (EIA 2010). suggesting that the Midwest and 

central Southeast are the most at risk of capadty shortages. 

:s 
1\voulnq a Train Wreck ~. 1\CI I I 

Table 1. EPA Regulatory Actions Affecting Utility Coal Power Plants 

Cl•,:m A tt Tr..1n,~ort 

R"lo (CATRJ 

tSucc•~'lOF' ta C:AIR) 

A•o~onoaf H~•• Ptogr~m 

e.,t AW" .. ,tl.)bf• R•traftt 

T~..chnology (I!JART_t _ 

N.;~•uon~l Amb••,.., Atr 

Ou;,tity St3nd~fd'\ 

414AA051 

W.:n•ra.nel w.,.,,.,....st•r 

Aging Fleet 

I 

't I 

• J 

I ' 

• ' I 

"I 

lu • ., ... I ,, ~ 

I ., I ' ' ' I 

n ~ 1 • • 

·'. ... 

.- I .\ - • a • ' (j 

J h • 

I 4 1 ~ 

to I 

't I .. ~ ... I 

. I I ' 

- L • I l 

.. , -

. . . . .. . . 

Source. Black & Veatch 2010 

Most of the coal-fired U.S. electric generation fleet was built between the 1950s and 1980s. These coal 

plants were originally designed to operate for 30 years, although through-life extens1on measures have 

enabled them to operate far longer than originally anticipated. The median coal generation plant was built 

in 1966, and most of the existing coal capacity is over 25 years old, with the last major additions occurring 

in 1980-1984 (Source Watch 2011 ). Until recently. many of these older, smaller plants were exempted 

from provisions of the Clean Air Act. As a result. many of these plants have not been modernized or 

updated with current emissions control technologies (Hsu 2006). Many of these older plants have not 

seen the level of modernization investment that some of the newer plants have received. so that their cost 

of operation may be higher due to deferred maintenance. 

Utility Fuel Prices 

Compounding the challenges for eleclric utilities is the shift in the relative prices of coal and natural gas. 

Durmg the 1990s and early part of 2000s, utilities in many regions made major Investments 1n new natural 

gas capacity (Elliott 2006). Because of restructuring of the electric power mdustry, low gas pnces at the 

time and improvements in gas power plant technology. some regions of the country saw substantial 

investments 1n natural gas fire generation (CRS 2010). However, during the 2000s. natural gas pnces 

rose dramatically and exhibited significant volatility, which made it a less attractive electnc generation 

source 

Durmg the latter part of the past decade, coal markets globalized and prices mcreased dramatically 

(Elliott 2006). During this same period, we saw the development of non-conventional natural gas 

resources 1n part1cular shale gas that has resulted in a dramatic reduction 1n natural gas pnces 1n North 

America (MIT 2011) These lower and more stable prices are projected to contmue 1nto the foreseeable 

future (Habacivch 2011. Petak 2011 ). Because of its low operatmg cost and low em1ssions relat1ve to 

coal. natural gas has again become a more attractive utility fuel even though the prtce of natural gas on a 

per Blu basis rema•ns somewhat higher than coal (see Figure 1 ). 

') 
Avoiding a lliHI Wreck (•) /\CI I I 

Nowak. Seth. Martin Kushler, Michael Sciortino. Dan York, and Patti Witte. 2011. Energy Efficiency 

Resource Standards: State and Utility Strategies for H1gher Energy Savings. 

!J.!!2:1faceee.orglresearch-re_Rort/u1 U . Washington. D.C.: American Counctl for an Energy-Efficrent 

Economy. 

Petak. Kevtn. 2011 . "Impact of Natural Gas Supply on CHP Deployment." presented to the USCHPA 

Spring CHP Forum. May 5, http:/J\v'\\1\v.uschpa.orglftlestConferences-Presentattons.§Rnng"" 20 

CHP'X.20Forum"u20201 1 Petak Spnng CHP Forum 05'Yr,2005'Yo2011 .Rdf. 

Sciortino, Michael, Seth Nowak, Patti Witte. Marty Kushler and Dan York. 2011. Energy Efficiency at 

Work: State Performance Meeting Energy Efficiency Goals. IJ!JP. :il eee. org !J:.e_s_ arc -rep rt 1J112. 

Washington. D.C. Amencan Council for an Energy-Efficient Economy. 

(SNL] SNL Financial LC. 2011. "ICF: Gas-Fired Generation to Increase: Coal Not Dead Yet:· Release 

July 13 http !/INvvw.snl.com.'lnleracllveX arllcle aspx?CDID=A-13024619-14636& 

KPLT=2 

Source Watch. 2011 . "Existing Coal Plants." Web site access on 412212011 . 

b.!!tr i'.V'.v'.v source:,atch org tndex Rl:m?tttle::Existtng U S Coal Plants. 

Tierney, Susan. 2011 . Electrtc Reliability under New EPA Power Plant RegulatiOns: A Field Gwde. 

http 1 v•rww wn.org stones 2011 01 electnc-reltabrhty-under-new-epa power-plant-regulations-treldgwde. Washtngton. D.C . World Resources Institute. 

(TVA] Tennessee Valley Authority. 2011 . 2011 Integrated Resource Plan, 

bJ!P-: 'vAvw tva.E_9v enwonmenl;reQorls/trp.mdex htm. Knoxvtlle, Tenn. 

Wald. M. 2009. "Big Utility to Close 11 Plants Using Coal." New York Times. December 1. 

I 1 [\'1.)1 110 J ON ,\tiO.) 1\ JI I.L O·II~I 

ll·~ll~IIJII S:: III'! "'=' Id II. -,)~ ,l."l!lh:IJ =>-:>[111'}11" ll'llln.">. ' ll Jllll ·'ll'l JI•J' \\\\\\ d 111j ll' -~ [I')~ }1\'l\0.) ' liS 
Avoiding a l r a 11 Wreck (L) ACI I 

of their goals (Sciortmo et al 2011) These EERSs prionttze energy efficiency mvestments by ullht1es. 

allowmg efficiency resources to contnbute to capac1ty needs. 

Efficiency Can Be Deployed Quickly 

Capacity shortfalls could occur as soon as 2015. Energy efficiency investments can be procured relatively 

qu1ckly compared with the longer lead time requtred for the permitting of new power plants or 

transmission hnes. It can take more than a decade to brmg a new power plant online and any number of 

pitfalls can delay the project. such as the secunng of financing and necessary permits, market volatility, 

and construction delays. In contrast energy efficiency comes tn fairly small chunks. so that investments 

can be spread out over time as needed. 

While a number of the at-nsk states have energy efficiency programs in place. most would require a rapid 

ramp-up to significantly contribute to mitJgation of capacity constraints. ACEEE s research (Nowak et al. 

2011) on states that have already deployed ·rapid starr programs documents key strategtes for achieving 

energy savmgs. including mcreasmg energy efficiency program budgets, creating stakeholder groups, 

and focusing on commercial and Industrial sectors. Although these "rapid start" states. like many of the 

affected states. d1d not have the benefit of well-established programs. they did have a large. low-cost 

reserve of energy efficiency opportunities because customers are less hkely to have done many energy 

efficiency improvements. 

RECOMMENDATIONS 

Current ut~ity regulatory and business models do not encourage utilities to make customer-stde 

investments. To realize the full economic benefits of energy efficiency will require a change in the utthty 

regulatory bus1ness model to encourage ut1ht1es to shift a large port1on of thetr investments from the 

supply-side to the demand-s1de. This shift w1ll requ1re changes that encourage ut1ht1es to 1nvest ratepayer 

funds 10 the demand-s1de and allow them to earn a return on these Investments 

The changes in the utrlity regulatory business model Will need to take place at the state level, since our 

Utility regulatory system 1s state-led. A key element of this change in the busmess model 1s to allow 

utthtres to make customer-side investments using ratepayer dollars and to allow a return on these dollars 

s1m1lar to returns they would receive when investing in supply-s1de resources Typically these returns 

would be 1n the form of performance incentives for meeting energy savmgs targets (Hayes et al. 2011 ). 

All customers would benefit from these investments in the form of lower electnClty rates (1 e .. lower rate 

increases than under a supply-side strategy). and a more vibrant local economy with more JObs. Electnc 

ut1ht1es would be motivated to become energy efficiency suppliers. not JUst electnc1ty suppliers. 

In many ways this recommendation is a return to the foundation of ut1hty Integrated resource plann1ng 

(IRP) that was mtroduced as a regulatory principle over three decades ago. At that trme ut1liltes were 

endmg a penod of raprd growth in electricity demand and major capacrty tnvestments Many stakeholder 

groups were expressing concerns about the cost of continuing to invest in new supply-side resources that 

were dnvmg up utility rates. Regulators saw that building a portfolio of supply- and demand-side 

resources represented a least-cost planning solution that would insure affordable electnc1ty 

Wrth retirements of many of the generation assets constructed during that prev1ous Investment boom we 

are aga1n faced With a need for new capacity. A return to the principles of least cost portfolio planmng 

represents an 1dea whose time has come again. 

Utilities need to participate and benefit 1f this solution is to become a reality In a gross s1mphflcahon. 

ut1httes make prof1ts by selling electncity and from making investments on the behalf of ratepayers on 

which they earn a regulated return. As a result, customer-side energy eff1c1ency negattvely impacts both 

these revenue streams by reducing sales and reducing the need for cap1tal mvestments 1n capac1ty (Kthm 

2009) A number of regulatory remedies have been proposed as part of the resource plannmg process 

1nclud1ng decoupling and incentives (Hayes et al. 2011 ). 

f 
/\vOid·nq a Train Wreck ., /\Ct I I 

A dialog will need to occur among ulililles. the1r regulators. and consumer groups. 1nclud1ng large 

customers. to find a path forward that will benefit all customers and the utilities themselves These 

discussions will likely be difficult because of the mertta of entrenched interests on the part of all 

stakeholders. However, the opportumttes for customers. the local economy, the envtronment and the 

economic future of the utility Industry suggest that thrs top1c represents a discussion that needs to be 

engaged rn w1th urgency and senousness. 

SUMMARY AND CONCLUSIONS 

Changes in fossil fuel markets and implementation of updated environmental regulations put on the order 

of 40.000 MW of coal generation at risk of retirement by uttht1es. This capacity is primarrly located in the 

Ohio Valley Upper Mrdwest. Southeast, and Mtd-Atlantic. where coal IS the dominant generation fuel. 

Utilities are ant1c1pated to need to make signrf1cant mvestments to meet existing demand etther for plant 

upgrades or replacement w1th natural gas capacity Recovery of these utthty investments '-"Ill structurally 

raise electric rates for decades. 

An alternative to these investments would be to tnvest in customer-side energy efficiency to replace much 

of thts capacity. Energy efficrency and CHP are typically less expens1ve energy resources than are either 

investments in environmental compliance retrofits of older plants or construchon of new natural gas-fired 

electnc generation. The lower utility tnvestment would mean smaller mcreases in future electrictty rates 

benefiting all customers. and many utihty customers would have the added benefit of seeing the~r energy 

bills decline as their consumption declines. 

A key target for these energy effrciency investments should be large energy consumers. particularly 

manufactunng firms , many of whom are poised to make major new capital capacity investments in thetr 

facilities as the economy recovers and demand for manufactured products increases. These investments 

in manufacturing have the added beneftt of modernizing energy-using infrastructure that offers add1tional 

local economic benefits of job creation and enhanced environmental compliance of the manufacturing 

facthttes 

Current utility regulatory and business models do not encourage utilities to make customer-side 

investments. A change in the utility regulatory business model to encourage utilities to shift their 

investments from the supply-side to the demand-side is needed to realize the full economic benefits of 

energy efficiency. This shift will require changes that encourage utilittes to invest ratepayer funds in the 

demand-side and allow them to earn a rate of return on these Investments. If these policies are put in 

place. customers wrll benefit from lower electricity rates. plus a more vibrant local economy with more 

JObs. Electricity utilities w1ll be motivated to become energy efficiency suppliers. not just electrictty 

suppliers. 

To begin to realize this opportunity a dialog among utilities. their regulators. and their customers should 

be imbated. Agreements w1U have to be reached on a state-by-state basis, because of our state-based 

utihty regulatory system. However because of the interconnected nature of our electric system. major 

customer-side efficiency investments in just some states wtll benefit all states in a region by taking some 

pressure off the need to make supply-side investment. Many challenges exist to reaching agreements 

but the benefits are huge and will create a more economically and environmentally sustainable electnc 

system. bolstenng local economtes 

It has often been observed that crisis and opportunity are inextricably linked. as a crisis encourages us to 

push the envelope of innovation and accomplish feats we dtdn't think we were capable of. The so-called 

"coal train wreck " may afford just such an opportunity to modernize our electric utility regulations to reflect 

a new century of different economtc and energy markets. creattng opportunities for the utility industry to 

define a new path to suslatned profitability by selling efficrency services not just electricity. while ensuring 

reliable and affordable power to their customers. 

,, 
Avoiding a I !<Ill Wreck ) /\CI I I 

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{BCG] Sirkin. Harold and Mtchael Zinser. 2011 . Made m the U S.A .. Again. Boston. Mass.: Boston 

Consulting Group. 

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