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October 13, 2005 - - EPA is proposing to revise the emissions test for existing electric generating units (EGUs) that are subject to the regulations in the major New Source Review (NSR) programs mandated by the Clean Air Act (CAA). For existing EGUs, EPA is proposing to compare the maximum hourly emissions achievable at that unit during the past 5 years to the maximum hourly emissions achievable at that unit after the change to determine whether an emissions increase would occur. This maximum achievable hourly emissions test would apply to emissions from existing EGUs. The current proposal would not affect new EGUs, which would continue to be subject to major NSR preconstruction review. These proposed regulations interpret the CAA in the context of NSR, for physical changes and changes in the method of operation at existing EGUs.

EPA is proposing to adopt an NSR emissions test based on mass of emissions per unit of energy output, such as lb/MW hour or nanograms per Joule. The proposed regulations would establish a uniform emissions test nationally for existing EGUs.

In short, EPA would judge these plants by the hourly rate of emissions rather than the total annual output. EPA believes these regulation changes and a separate cap-and-trade will curb harmful nitrogen oxide and sulfur dioxide pollution faster and better than the New Source Review rule the agency seeks to modify.Under the current law, established under CAA regulations in 1977, a plant must put in new controls if a modification increases its annual emissions; the new rules would require such controls only if the hourly emissions increase. NSR has led to significant litigation but not much installation of scrubbers. About 50 utilities are still in court over NSR regulations.

June 15, 2005 - - The Richmond Virginia-based 4th U.S. Circuit Court of Appeals ruled that Duke Energy did not violate the Clean Air Act and did not need U.S. EPA permits to modify eight coal-fired power plants in North Carolina and South Carolina between 1988 and 2000. The permits would have triggered new-source review (NSR) provisions of the Clean Air Act, requiring Duke to install more effective pollution controls. It was ruled that the changes to the plants enabled them to operate longer hours, thus increasing their overall pollution, but they did not increase the plants' hourly rate of pollution.

This is another reason AAEA supports the Clear Skies Initiative. This sort of litigation goes back and forth between environmental groups, EPA and the utility industry for decades and it does not result in the reduction of polluting emissions. We believe that an air pollution trading program would be embraced by all and would lead to actual reducitons in emissions.

EPA NSR Response Stresses Improvements to Permitting Program

June 6, 2005- - EPA responded on June 6, 2005 to petitions for reconsideration from a number of stakeholders on the Equipment Replacement Provision (ERP) of the Agency's New Source Review (NSR) permitting program. EPA determined that the ERP should be maintained as adopted in 2003. EPA continues to believe that the October 2003 ERP rulemaking is fully justified and will provide much needed clarification to the NSR program while still ensuring environmental protection. The ERP offers certainty for industrial facilities by clearly spelling out that the NSR program should not stand as a barrier to equipment replacement activities needed to assure the safe, efficient, and reliable operation of manufacturing facilities. The ERP, in conjunction with other programs such as the Clean Air Interstate Rule, the Acid Rain Program and the National Ambient Air Quality Standards, preserves public health protections provided by the Clean Air Act through the NSR program. Under the ERP facilities cannot increase their emissions past their current Clean Air Act limits.For additional information on the New Source Review Program visit: http://www.epa.gov/nsr Contact: Eryn Witcher, 202-564-4355 / witcher.eryn@epa.gov Source: EPA

March 18, 2005 -- The Department of Justice and the Environmental Protection Agency today settled a case alleging that Ohio Edison Company, a subsidiary of FirstEnergy Corp., violated the New Source Review (NSR) provisions of the Clean Air Act at the W.H. Sammis Station, a coal-fired power plant in Stratton, Ohio. The states of New York, New Jersey and Connecticut, who are co-plaintiffs in the government's lawsuit, also join the settlement. The consent decree agreed to by Ohio Edison will reduce emissions of harmful sulfur dioxide (SO2) and nitrogen oxides(NOx) from the Sammis plant, as well as from other Ohio Edison and FirstEnergy coal-fired power plants, by over 212,000 tons per year. The pollution controls and other measures required by the consent decree are expected to cost approximately $1.1 billion.

The settlement resolves a lawsuit filed in 1999 as part of a federal government initiative, joined by the states of New York, New Jersey and Connecticut, to bring operators of coal-fired power plants into compliance with the NSR provisions of the Clean Air Act. The Sammis Station is one of the largest sources of air pollution in the nation, emitting a total of tons of SO2 and NOx in 2003. After a four-week trial in 2003 the U.S. District Court for the Southern District of Ohioagreed with the government that there were NSR violations at the Sammis plant. The court had not yet held the second trial needed to determine what pollution controls, penalty and other remedies would be required for these violations. The settlement resolves the remedy phase of this litigation, thereby averting a trial.

Sulfur dioxides and nitrogen oxides cause severe respiratory problems and contribute to childhood asthma. These pollutants are also significant contributors to acid rain, smog and haze, which impair visibility in national parks. Emissions from power plants are carried significant distances downwind, causing air quality problems in other states to which the polluted air is carried.

The Consent Decree will reduce SO2 and emissions from the Sammis Station by a total of 134,500 tons of SO2 and 28,567 tons of NOx per year. Pollution controls will be installed at all seven of the Sammis steam-generating units, and a plant-wide cap will be imposed on and emissions. The two largest units, which account for over half the plant's pollutant emissions, will receive state-of-the-art pollution controls known as flue gas desulfurization devices (scrubbers), which reduce SO2 emissions by at least 95 percent, and selective catalytic reduction (SCR) devices, which reduce NOx emissions by at least 90 percent. Pollution controls will be installed between 2005 and 2010. The final plant-wide caps and emission reduction levels will be achieved in 2012.

Ohio Edison and FirstEnergy will provide over 49,000 tons per year of additional reductions in SO2 and NOx emissions from three other power plants: the Burger plant in Belmont County, Ohio; the Mansfield plant in Beaver County, Pa.; and the Eastlake plant in Eastlake, Ohio. These additional reductions will be achieved by upgrading existing pollution controls or installing new pollution controls at these plants. These additional reductions will bring the total SO2 and emission reductions under the Consent Decree to over 212,000 tons per year by 2012.

This is the ninth settlement that the federal government has entered into to address Clean Air Act NSR violations by coal-fired power plants. The combined effect of the settlements achieved to date will be to reduce emissions of harmful pollutants by over 940,000 tons each year through the installation and operation of about $5.5 billion worth of pollution controls. In terms of both the amount of the pollution reductions and cost, this settlement is the second largest of the power plant NSR settlements to date. The $8.5 million civil penalty imposed is the second largest penalty against a power plant.

The $25 million amount for mitigation projects, to compensate for the harmful effects of Ohio Edison's past violations, is the largest mitigation project commitment in any of the United States' NSR settlements with utilities to date. Ohio Edison will fund $14.4 million in renewable energy development projects, specifically wind power projects in Pennsylvania, New Jersey or western New York. The wind power generated will displace an equivalent amount of coal-fired power and thereby further reduce emissions from coal-fired plants. Ohio Edison may propose, alternatively, to fund new projects to generate electricity from landfill gas in New York, New Jersey or Connecticut.

Ohio Edison also will provide a total of $10 million to the states of New York, New Jersey and Connecticut to perform environmentally beneficial projects related to air pollution in those states. The specific projects will be determined by the states after the consent decree is entered. Allegheny County will receive $400,000 to install a solar power project at one of the County's municipal buildings. Ohio Edison also will provide $215,000 to the National Park Service for an environmentally beneficial project related to air pollution in Shenandoah National Park, a Clean Air Act "Class I area" that has been adversely impacted by emissions from Sammis and other power plants.

The proposed Consent Decree will be lodged with the United StatesDistrict Court in Columbus, Ohio, for a thirty-day public commentperiod.

Dynergy, which bought Illinois Power, which was bought by Ameren Settles with EPA over NSR

IMarch 2005 -- llinois Power Co. will install $545 million in pollution controls at five coal-fired power plants and pay a $9 million fine to settle a federal lawsuit alleging Clean Air Act violations. The U.S. Environmental Protection Agency is requiring Dynegy Corporation to install equipment to cut pollution at its coal-fired plants in the Midwest. Dynegy was sued in connection with its operating unit Illinois Power, which it sold to St. Louis, Missouri-based Ameren Corporation in 2004. Five other plants that Dynegy still owns are subject to the agreement.

The $9 million fine is to settle the case against its Baldwin Station plant in Baldwin, Illinois, which will switch to low-sulfur coal and will invest in scrubbers and filters until 2012. The agreement is among Dynergy, the Justice Department, the Environmental Protection Agency and Illinois. The $9 million civil penalty is the highest so far under the NSR program.. Dynegy has agreed to spend $15 million in other projects to reduce mercury pollution, protect land around St. Louis and along the Illinois River, conserve energy in city buildings, and reduce diesel emissions at truck stops.

The settlement, filed in federal district court in East St. Louis, involves violations of the Clean Air Act's 1977 "new source review" programi. When the original 1970 Clean Air Act passed, it was thought that many existing coal plants would shut down after they reached the end of their useful economic lives, and few suspected they would extend into a new century. The old plants were granted “routine maintenance” exemptions from the act. The Bush administration is continuing with the 51 New Source Review lawsuits initiated by the Clinton administration. The suits now pending are over the definition of “routine maintenance.”

NSR requires companies to seek a permit when expanding or modifying, and to install more pollution controls when pollution is significantly increased. NSR proponents assert that utilities have hidden behind that exemption in an effort to boost the total output of those coal-fired plants—something that requires an investment in new pollution technologies. The current settlements are therefore less about the payment of penalties than just enforcing the intent of the Clean Air Act, which advocates believe would work well if adequately implemented.

The utilities listed below have agreed with the EPA to make changes rather than go to trial:

Utilities being sued under the New Source Review provisions are weighing the cost of fighting versus the price of settling. Unfortunately, fossil fuel power plants causie 62 percent of emissions that cause acid rain. They also cause 21 percent of the smog. New Source Review affects 17,000 U.S. industrial plants that include almost 600 coal-fired power facilities.

Utility	Status and Plans
FirstEnergy	Lost a critical court case that concluded the company violated the New Source Review and it is now in settlement talks with federal regulators.
Tennessee Valley Authority	Plans to spend $6 billion by 2010 to comply with the Clean Air Act. By 2010.
Kentucky Power	Petitioned a federal court to dismiss the suit filed against it. The EPA opposed the motion.
Duke Energy	EPA has backed off of NSR challenge.