October 27, 2011 / 11:07 PM / 9 years ago

Exelon backs controversial EPA clean air rules

HOUSTON (Reuters) - Chicago-based Exelon Corp on Thursday said the Environmental Protection Agency should move quickly to finalize its Cross-State Air Pollution Rule and other delayed measures, adding it would be cheaper than subsidizing some renewable power technologies.

Exelon’s statement comes as U.S. power producers take sides in the federal push to reduce dangerous emissions from coal-fired power plants and makes the biggest U.S. nuclear reactor operator the most vocal industry supporter of stringent EPA rules.

The EPA is coming under increased political and legal pressure from companies and states seeking to delay or revise several long-delayed rules to cut emissions of sulfur dioxide, nitrogen oxide and mercury from power plants.

The rules have been lambasted by many big coal-burning U.S. utilities and even a few Republican presidential candidates. They have also fractured the U.S. power industry and made it difficult to present a united front.

On one side of the issue are nuclear and wind operators like Exelon NextEra Energy and merchant firms like Calpine which uses cleaner natural gas to fire its generators.

On the other side are coal-burning utilities who are squarely in the cross hairs of the new EPA regulations.

While Exelon operates some coal plants, those operations are dwarfed by coal fleets operated by utilities like American Electric Power Co Inc, Southern Co, and Luminant, Texas’ largest power generator.

“Merchant generators with a low pollution profile stand to benefit from expensive regulations being imposed on other market participants,” said Paul Patterson, an analyst at Glenrock Associates in New York.

Exelon shifted the environmental discussion in its latest Exelon 2020 report, saying that well-functioning wholesale power markets can help achieve cleaner air goals at a lower cost.

“Markets are delivering more than cost savings and reliability — they are also delivering clean energy,” John Rowe, Exelon chairman, said in a release. “We believe that they will continue to be the best mechanism for delivering clean, reliable and affordable electricity.”

Exelon said its analysis of the 13-state PJM wholesale market — the nation’s largest — compared a functioning competitive market with what it called “more politically popular” ideas, such as renewable energy subsidies.

“These options were shown to cost consumers up to an additional $15 billion per year — or four times the lowest-cost approach — while sometimes falling well short of the nation’s clean air standards,” Exelon said.

Rowe has been touting the benefit of lower natural gas prices, from plentiful new shale resources, in the transition from reliance on dirty coal plants to cleaner gas-fired plants.

“Properly designed competitive markets will ensure that the energy supply is cleaned in the most effective manner,” Rowe said. “No new mandates or subsidies are needed so long as EPA Clean Air Act regulations go into effect.”

Earlier this month, the agency delayed a final rule, known as the Utility MACT rule, which is opposed by 25 states, saying it needed more time to review comments.

Sixteen states are challenging the EPA’s January deadline for implementation of the Cross State Air Pollution Rule.

Editing by Chris Baltimore and Jim Marshall

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