Regulatory Climate. David J. Kolaz, Illinois Environmental Protection Agency, Springfield, Illinois 62794-9276

Fossil fuel-fired power generation has been regulated through various State and federal environmental programs for over 30 years. The environmental improvements brought about by these programs have been dramatic, particularly in regard to the reduction of air emissions and ambient levels of sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter. To illustrate these overall reductions, consider that the Statewide average emission rate for SO2 for coal-fired power plants was ~3.0 pounds per million BTU in 1990 and was ~0.9 pounds per million BTU in 2000. In 1990 the Statewide emission rate for NOx was ~1.0 pounds per million BTU and it was ~0.45 pounds per million BTU in 2000. These reductions have also manifested themselves in the ambient concentrations measured by the Illinois EPA's statewide monitoring program. For example, the SO2 annual averages measured at the 29 monitoring sites in Illinois in 2000 ranged between 2 and 11 parts per billion, which are well below the State and federal health standard of 30 parts per billion. Yet, the focus on fossil fuel fired power generators, particularly those that are coal fired, has done nothing but intensify. Consider the following:

1. The NOx emissions from power plants are now not only subject to the limits imposed by the USEPA's Acid Rain program but also the reductions mandated by new rules to reduce the impact of interstate ozone transport.

2. The USEPA has recently announced plans to control mercury from coal-fired power plants.

3. New requirements to control fine particulate and regional haze include fossil-fueled power plants as one of the sectors of greatest interest.

4. In the past year, there has been much discussion about the issue of controlling carbon dioxide in order to mitigate the impacts of global warming. This issue alone has major ramifications for the future of power generation in the United States and particularly in Illinois.

Add to these environmentally based concerns, the economic basis for avoiding undue distortions in a deregulated power market caused by "grandfathering" older power plants and further impetus is given to imposing additional environmental restrictions on power generators. This prospect has been the subject of discussion and debate in many quarters and has expressed itself in terms of the need for a "multi-pollutant" approach to further controlling power plant emissions. The Governor's Energy Cabinet has prepared a State Energy Policy that recommends a multi-pollutant approach to any further power plant regulation because of the benefits it offers to the regulated community in terms of their planning requirements and the economic efficiencies that can result. The Illinois Resource Development and Energy Security Act, signed by Governor Ryan in June of this year, provides a careful balance that emphasizes continued progress in environmental gains with the need to promote a policy that encourages a diverse portfolio of power generation in Illinois that will result in achieving a safe, sufficient, reliable, and affordable supply of electric energy for the future. This presentation describes the environmental gains that have been made, the evidence for imposing additional environmental restrictions, the specific regulatory initiatives that are being debated, and the challenges that such initiatives present for the development of an effective energy policy for Illinois.

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