Power Partisanship (Demonizing utilities for fun and political profit)

The timing appears purely coincidental. But the Bush Administration couldn't have picked a better first response to the Great Northeast Blackout than the regulatory clarification the EPA is slated to unveil tomorrow. The refinements to the "new source review" (NSR) provisions of the Clean Air Act mean power generators will be able to maintain their facilities without fear of being hauled into court.

This is the business I'm in and I lived through this mess.

A little background:

The Clean Air Act created a "bubble" - or a maximum amount of sulfur dioxide the utilities can emit in a year's time. They were given "allowances" to emit the gas and the allowances were about one-half what they were emitting before the act took effect or a 50% reduction nationwide. If they installed abatement equipment and didn't use their allowances, they could sell them to someone else.

Theoretically, with a national "cap" on emissions, a brand new plant would have to purchase allowances from the "pool." Similarly, if an exisitng utility desired to burn a higher sulfur fuel, or modernize an older boiler - they'd also need to purchase allowances.

The "new source review" (NSR) provisions of the Clean Air Act are poorly written and are strange. The concept is if an older utility power station gets a major overhaul, they need to install scrubbers. But--once scrubbers are installed -- they now have a bunch of unused allowances to sell to someone else. The net effect on the national cap is zero.

The Clinton Administration to the rescue. Realizing the NSR has no effect, they went to court asking not only for installation of scrubbers but - as punishnment - surrendering the allowances.

Similar silliness exists for other pollutants - NOx and mercury. There are also pending problems for the utilities with laws dealing with the combination of SO2 and NOx (PM10 and PM2.5).

The the Bush Administration's Clear Skies initiative is designed to fix the problems. It lowers the nationwide cap substantially on SOx, NOx, and mercury - but at the same time - gives much needed planning back to the utilites instead of the courts.

We will eventually have to choose a level of pollution that involves a sufficiently low risk of harmful effects. We could, possibly lower all criterion pollutants another 50% or so, but we'd pay heavily.

Plus, current environmental law is written with trial lawyer job security in mind. The law exempting older utilities was classic intrest group politics. By allowing older utilities a free walk to 1st Base as long as they failed to modernize, they protected actual polluters from having to suffer. By slamming regs on the newer plants, they looked like they were really "Doing Something About The Problem!"

The net result of this is ludditism. Noone can build any new plants, noone wants to modernize old ones. Call it the "Lights Out!" policy of environmental regulation.

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