### Statement of the Edi son Electric Institute
Environmental Protection Agency

Public Hearing Proposed Rule: Implementation Plans to Reduce Interstate Transport

o f Fine Particulate Matter and Ozone

Chicago , Illinois August 19, 2010

Page 1 Good morning, m y name is Dan Chartier

. I am Director, Environmental Markets and Air Quality Programs 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
pe rcent of the ultimate customers in the shareholder

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

Let me begin by saying that EEI shares a commitment with the Environmental Protection Agency (EP A) to further reduce emissions from power generating facilities and is generally supportive of the policy objectives underlying EPA ’ s proposed Transport R ule

.

In fact, th e electric power industry has already made significant p rogress in reducing emission s in sulfur dioxide ( SO 2 ) and nitrogen oxides ( NO x ) , even while the nation has consumed more energy and the economy has grown. In particular, national SO 2 emissions from power plants in 2009 were 64 percent lower than in 1990 , and n ational power plant NO x emissions declined 70 percent over the same time period. Further, p ower generation NO x emissions during the ozone
season in the 20

- state region covered by NO x Budget Trading Program in the Eastern U.S. have declined 81 percent since 1990.

In order to co ntinue to effectively produce electricity and reduce emissions, t he electric sector
need s clear, coordinated 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 customers and impacts on shareholders, avoid straining natural gas supply and prices, and continue efficient and reliable electric generation using divers e, domestic energy resources.

### Page 2

While some of our member companies 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 requiremen ts, settlement agreements, fuel mix or other
factors

– other EEI 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 af ter 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 com pliance deadlines

.

There is also concern by some companies that 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.

It is important to recognize that some EEI member companies bel ieve that the full schedule, from conceptualization to regulatory approvals by financial regulators 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 contra st to EPA’s estimate that a new scrubber can be installed
in 27 months

.

EEI believes that it is 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 regarding 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 prop osal
that it is likely to alter this proposal to address wintertime emissions related to attaining 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 w ill issue a “Transport Rule II” related to a tightened (August 2010) ozone standard , and it is almost certain that EPA will propose an

### Page 3

additional major t ransport r ule by 2013 to address a more stringent late

- 2011 NAAQS for particulate matter. These rules are a ll in addition to the power generator MACT rule , which will
not be finalized until late

- 2011 ( about 6 months after the final Transport Rule ) and which will greatly influence company decisions regarding SO 2 control equipment.

Apart from our concerns
, EEI supports several aspects of the flexibility 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 that 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 air shed.

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