Consumers to Pick Up $7-$12 Billion Tab to Retrofit 'Dirty' Coal-Fired Electric Plants by 2003, According to New Fuld Study; EPA Regulations May Prove Politically Decisive for Gore-Bush.

Business Editors and Energy/Environmental Writers

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Aug. 21, 2000

Consumers in twenty-one Eastern states could be facing a $7-12 billion bite out of their wallets to ensure that coal-powered electric utility plants substantially reduce their Nitrogen Oxide (NOx) emissions by 2003, an issue that could become politically decisive in the upcoming Presidential election.

A new study by Fuld & Company, a research and consulting firm in Cambridge, Massachusetts, concludes that an Environmental Protection Agency (EPA) ruling requiring State Implementation Plans (SIPs) by the end of this year will result in power plants rushing to install expensive technology, because there will be no time to explore and test more cost effective remedies that could be implemented in phases.

"The challenge faced by the industry is that, while many people seek environmental protection, few (including legislators) want to pay more for the energy we use to heat and light our homes, fuel our vehicles, or power our factories," said Ravi Krishnan, Associate Director, Public Utilities Practice, Fuld & Company, who authored the study.

Vice President and Democratic Presidential candidate Albert Gore, Jr. announced June 26, 2000 in his Climate Initiative that federal funds should be allocated to help defray the cleanup costs and stabilize electricity rates. Republican Presidential candidate George Bush, Jr. has not commented on the EPA ruling. His home state of Texas leads the U.S. in toxic industrial air pollution.

The EPA ruling was handed down in 1998 and reaffirmed by the federal D.C. Circuit Court of Appeals in March 2000 to reduce the state-to-state transport of air pollution from approximately 140 power plants. It would require an 85% reduction of NOx emissions from 1990 levels by 2003. Over the past 20 years, the U.S. has reduced NOx emissions by only 13% compared to a 60% reduction in the Czech Republic, 38% in the UK, and 31% in Germany.

NOx can create ground level ozone which, when inhaled, can cause acute respiratory problems, aggravate asthma, reduce lung capacity, inflame lung tissue and impair the body's immune system. It also contributes to regional haze and global warming. Electric utilities account for 33% of the U.S.'s annual NOx emissions.

Krishnan contends that the EPA implementation timeline is short, and that the affected power plants may have to rely on expensive solutions for technology conversion. With a deadline for submitting SIPs only a few months away, it is not clear whether they can evaluate a range of control technology options to balance emission control requirements with compliance costs. A two or three-year extension would enable power plants the opportunity to explore a mix of technologies that could be implemented in phases and not unduly burden their operations and, ultimately, the consumer through higher electricity rates, according to Krishnan.

Fuld and Company (www.fuld.com), is an international leader and pioneer in the field of competitive intelligence. Founded in 1979 by Leonard M. Fuld, a recognized competitive intelligence expert, Fuld & Co. has affiliates throughout the world. The company's client roster includes more than half the Fortune 500.