I have attached an article from today's BNA that gives a fairly accurate write-up of our Clean Power Group proposal on multipollutant emissions regulation.  Please call if you have questions.

Jeffrey Keeler
Director, Environmental Strategies
Enron
Washington DC office - (202) 466-9157
Cell Phone (203) 464-1541


BNA Daily Environment Reporter
August 10, 2001

Utilities Optional CO2 Reductions Included in Plan By Energy Companies to Lower Emissions

A group of five energy companies is floating a proposal to cut power plant emissions, with an option for cutting carbon dioxide, while setting emissions limits that would begin almost immediately. The proposal by the Clean Power Group joins a multi-emissions proposal from another industry coalition, the Clean Energy Group, as well as several
proposals in Congress for power plant emissions reductions. In addition, the Bush administration is set this fall to propose legislation to reduce power plant emissions but leave out CO2.

The Clean Power Group is circulating the proposal in Congress and has attracted interest among members, the group's director Joel Bluestein told BNA Aug. 8. He declined to say if any members support it. Like other multi-emissions bills, the Clean Power Group proposal would cut emissions of sulfur dioxide, nitrogen oxides, and mercury.  A key difference from other plans, though, is that emissions reductions would begin in 2003, Bluestein said. 

In addition, while most plans call for major one-time reductions in emissions, the Clean Power Group calls for gradual reductions in emissions. Bluestein said that, with its continuous annual reductions, the proposal would achieve emissions cuts equal to or greater than most other proposals, as well as those called for by existing regulatory programs.  Gradual but steady reductions allow time for new technology to come onto the market, Bluestein said, but provide a continuing "technology forcing" effect as demand for more effective emissions reductions strategies increases.

To avoid potential economic disruptions from requiring emissions reductions, the Clean Power Group proposal also calls for suspending the reductions temporarily if the cost of reductions rises above a certain level, Bluestein said.

Circuit Breaker

The Clean Power Group proposal calls for using tradeable allowances to allocate emissions among sources, making it
similar to other proposals. If the price for allowances rose above a certain "circuit breaker" level for any pollutant, reductions in emissions of that pollutant would be frozen until the allowance price fell below that level.
				
The Clean Power Group plan shares features of an earlier proposal floated by the Clean Energy Group, formed by several unregulated subsidiaries of electric utilities. However, materials provided by Bluestein said the Clean Power Group is somewhat more aggressive in seeking emissions reductions.  The Clean Power Group was formed by Calpine, Enron, NiSource, Trigen Energy, and El Paso Corp., all of which are involved in power, gas, or coal production, Bluestein said.
		
According to the Clean Power Group, it is proposing emissions reductions that are similar to or greater than legislation (S. 556) introduced by Senate Environment and Public Works Committee Chairman James Jeffords (I-Vt.). The Jeffords bill has strong support among environmental groups.  Mercury reductions in the Clean Power Group proposal would be greater than those in the rival industry proposal but less than those in the Jefford's bill, and would not exceed reductions being contemplated by the Environmental Protection Agency until 2012.  The CO2 reductions in the proposal would be
less than that proposed by Jeffords or the rival industry group, or those called for by Kyoto Protocol on climate change but would be more effective in encouraging a robust market for CO2 allowances, Bluestein said.

The Bush administration opposes controlling CO2 emissions because of the potential negative economic effect, but
Bluestein said the Clean Power Group's gradual reductions would establish a system for implementing reductions that would be in place if Congress or the administration decide in the future that CO2 reductions are needed.