Editor's Note: This blog introduces readers to Ralph Izzo, Chairman, President and CEO of Public Service Enterprise Group.
As one of the largest electricity generators in the U.S., we, at Public Service Enterprise Group (PSEG), believe that EPA's air pollutant regulations should be viewed as an opportunity to modernize the nation's electric power infrastructure. PSEG has been a long-time advocate of these Clean Air Act regulations and has put its money where its mouth is, investing over one and a half billion dollars in improvements to its coal-fired plants. These regulations will not only improve air quality for our nation's citizens, but will also create jobs and an active marketplace for emissions trading.
Frankly, action is long overdue. The air pollutant regulations proposed by EPA are in response to the D.C. Circuit's rejection of two rules (the Clean Air Interstate Rule (CAIR) and the Clean Air Mercury Rule) originally proposed by the Bush Administration. Thus, these regulations do not come out of the blue. The regulatory process for regulating toxic air emissions commenced over two decades ago, and the court concluded CAIR was "fundamentally flawed" in 2008.
For our part at PSEG, we believed it made good business sense to be proactive in positioning our generation fleet to meet what the rules would require. During the past five years, we have invested more than $2 billion to replace inefficient, older generating units and upgrade our existing facilities in New Jersey, New York, Connecticut, and Pennsylvania. These air quality standards are achievable with the appropriate investment. For example, nearly 60 percent of all coal-fired boilers that submitted data to EPA are currently achieving the Utility Toxics Rule's proposed mercury standards. Existing pollution control technologies have demonstrated their mettle, and they need to be further deployed throughout the nation.
Our experience shows that it is possible to clean the air, create jobs, and power the economy at the same time. For example, our New Jersey coal plants with their various pollution-control systems have been able to reduce, by over 90 percent, emissions of mercury, acid gases and soot. Installing the systems created approximately 1,600 construction jobs and enabled us to add dozens of full-time positions. We are proud of these results and proud to have facilities that are among the cleanest coal stations in America.
Reliability is a critical consideration at all times in the electric power industry. We believe our industry is capable of meeting these clean air rules while maintaining electric system reliability. The U.S. bulk power system, at an aggregate level, has adequate spare capacity to absorb potential retirements. Many of the uncontrolled units, which are most likely to retire, are smaller, inefficient units and companies are already making retirement decisions independent of the Utility Toxics Rule due to fundamental economics. Moreover, the electric industry has a proven track record of adding additional generating capacity and transmission solutions when and where needed and of coordinating effectively to address reliability concerns.
The Clean Air Act gives affected sources three years from the issuance of the final rules to comply with the regulations. Further, if there are isolated reliability issues in areas of heavy demand as a result of implementing the air regulations affecting the electric sector, existing risk management procedures under the Clean Air Act, the Federal Power Act, and other statutes already provide EPA, the Department of Energy, the Federal Energy Regulatory Commission, and the President with tools to address unforeseen impacts on electric system reliability on an individual basis.
Simply put, the time is overdue to implement the Clean Air Act Amendments of 1990. Doing so will help provide much needed certainty to invest in capital-intensive projects such as power plants that operate for 40 years or longer. Having these regulations in place will make it clear what the energy industry needs to do. In contrast, any significant delay for these rules will only perpetuate uncertainty where clarity is needed. The time for action is now.
Ralph Izzo is Chairman, President and CEO of Public Service Enterprise Group