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Delay Tactics: A Few Big Utility Companies Seek to Delay Important Clean Air Protections

Posted by Dan Bakal at Nov 28, 2011 03:00 AM |
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The EPA is scheduled to release its Mercury and Air Toxics (a.k.a., Utility MACT) Rule on December 16. The rule will establish, for the first time, limits on mercury and other toxic air pollutants from coal-fired power plants. Although power plant operators would not be required to comply with the Utility MACT rule until 2015 or 2016, members of Congress and some within the electric industry have been suggesting that EPA push back the compliance schedule even further. AEP, for example, has suggested that it may need until 2020 to comply.
by Dan Bakal, Director, Electric Power Program Ceres Posted on Nov 28, 2011


The EPA is scheduled to release its Mercury and Air Toxics (a.k.a., Utility MACT) Rule on December 16. The rule will establish, for the first time, limits on mercury and other toxic air pollutants from coal-fired power plants.

Although power plant operators would not be required to comply with the Utility MACT rule until 2015 or 2016, members of Congress and some within the electric industry have been suggesting that EPA push back the compliance schedule even further. AEP, for example, has suggested that it may need until 2020 to comply.

I have been reviewing industry earnings call for several years, and in my most recent review of 3rd Quarter earnings calls, I looked closely at how companies are positioned to comply. I was surprised (and pleased) to find that, despite the heated rhetoric, most companies have been assuring financial analysts that they are well on their way in terms of cleaning up their coal fleets.

For example, take Jim Rogers, CEO of Duke Energy, which generates more than 60 percent of its electricity from coal. He recently described his “fleet modernization” program during the company’s third quarter earnings call. The company has a number of new power plants coming on-line and is on track to have “nearly 100%” of its coal generation capacity equipped with advanced pollution control systems.

A new report out today details positive statements made by 30 power companies indicating that early investments in their power plants have put them in a good position to comply with EPA’s new air pollution rules. The report notes that these companies represent 50% of the nation’s coal-fired power plants, and eleven of the 15 largest coal-based electric power companies. Across the fleet, about 50% of coal plants are very well controlled with scrubbers and other pollution control systems. So, let’s do the math:

  • 70% of the nation’s electric generating facilities are not affected by EPA’s Utility MACT Rule because they rely on natural gas, nuclear, or other non-emitting energy sources.
  • 15% of the nation’s electric generating facilities are coal plants that are already complying or well on their way to comply with the Utility MACT Rule.
  • This means that 85% of the nation’s electric generating fleet is unaffected by the rule or ready to comply.


This leaves me asking, just why is it that some in Congress are considering delaying important health protections for millions of Americans to accommodate a small fraction of the electric generating fleet and a minority of companies?

Among the most vocal companies calling for extended delays of the Rule are AEP, Southern Company, and MidAmerican. I see no sense in delaying important health protections for a few companies that have failed to make investments in cleaning up their fleets. AEP, for example, has only installed scrubbers on about half of its coal fleet.

Furthermore, why delay important health protections when utility companies have record amounts of cash on their balance sheets that could be used to modernize their generating fleets, creating millions of good paying, skilled construction jobs?

A recent Ceres analysis shows that the top 20 electric generators in the U.S. have record cash reserves exceeding $35 billion. This capital is sitting on the sidelines precisely because many companies have been anticipating this new rule, and are ready to invest, as the country struggles with high unemployment.

Clean Air Graphic

Recent polling sponsored by Ceres shows that the American public is not interested in further delays. The nationwide poll shows that by a wide margin, voters of both political parties and in all regions of the U.S. support the EPA’s new rules to limit air pollution from coal-fired power plants. Two-thirds of the respondents – 67 percent – oppose Congress delaying implementation of the air pollution rules, according to the national survey of 1,400 voters.

So, with most companies standing ready to deploy private capital that creates jobs, and a public that strongly supports the Toxics Rule, it makes more sense to move forward than to postpone or delay.

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Meet the Expert

Dan Bakal

Dan oversees Ceres’ electric power and coal research, shareholder engagement, and furthers the understanding of environmental risks, with a particular focus on climate risk. He works closely with Ceres coalition members, including environmental, investor, labor and public interest groups, to engage in dialogues with electric power companies, which often involve a comprehensive review of environmental policies, performance, and disclosure practices.

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