GLENDALE, Ariz., Oct. 28 /PRNewswire/ -- Two years after the Clean
Air Interstate Rule (CAIR) was vacated and remanded by the U.S.
Court of Appeals for the District of
Columbia, electric utilities find themselves in a brave new
world of more regulatory uncertainty and fewer options for
compliance, industry professionals discussed at the EUCG fall
workshop in Glendale, Ariz., last
month.
EUCG, a global association of energy and electric utility
professionals, meets semiannually to discuss current and emerging
industry issues, share best practices and exchange data for
benchmarking purposes. The association is in its 37th year of
service to the power generation industry.
On July 11, 2008, the D.C. Circuit
struck down CAIR citing the rule had "more than several" fatal
flaws and "[n]o amount of tinkering with the rule" could fix these
flaws. Almost two years to the day, on July
6 this year, the U.S. Environmental Protection Agency
released its long awaited replacement for CAIR, dubbed the
"Transport Rule," which seeks to cap emissions at the state level
compared to CAIR's cap-and-trade approach. The Transport Rule is
set to be finalized sometime in 2011, with 2014 as the target date
for it to go into effect. This aggressive timeline for compliance –
around 24-36 months after final rulemaking – has many in the
electric industry concerned, given the average time it takes
utilities to plan for and install environmental control equipment
on power plants. Some industry consultants contend that a typical
environmental control retrofit project takes 42-52 months on
average to design, permit, build and install the necessary
pollution equipment.
"Our industry will need to install somewhere between 6,000 to
10,000 megawatts of new environmental control infrastructure needed
to meet the Transport Rule standards," said EUCG President
Mark Derry of Exelon (NYSE: EXC).
"Twenty-four to 36 months is a significantly aggressive planning
and construction timeline, with tens of billions of dollars needed
to meet the rule's environmental goals. To say our industry has a
huge challenge on its back is an understatement."
"Our industry has made significant gains in reducing pollutants
and improving air quality over the past three decades," said
George W. Sharp, EUCG vice president
from American Electric Power (NYSE: AEP). "The U.S. electric
utility industry has installed well over 200,000 megawatts of
pollution control equipment in a little more than a decade, and we
are prepared to do whatever it takes to meet regulatory
requirements," Sharp said. "But we want to work with regulators and
other stakeholders to ensure that any new environmental mandate is
reasonably conceived, orderly executed, and consistent with the
overarching economic as well as environmental concerns of our
nation."
The keynote for the workshop was provided by James R. Hatfield, senior vice president and
chief financial officer of Pinnacle West and its principal
subsidiary Arizona Public Service (APS). Hatfield described
Pinnacle West's focus on operational, environmental and
sustainability leadership, including APS's recent strides in
installing solar energy throughout Arizona. He also challenged all U.S. utilities
to focus on sustainability in their operations. "Utilities that
have a business model rooted in sustainability, and an eye on our
industry's collective environmental future, will perform much
better for their shareholders and customers in the long run than
those who either refuse or choose not to embrace such a model,"
concluded Hatfield.
EUCG's individual committees reported that the benchmarking data
collected and analyzed annually from member companies continue to
provide a strong strategic benefit to EUCG members. David Ward, EUCG's Nuclear Committee chair from
Duke Energy (NYSE: DUK), said that his committee discussed
different approaches to transforming raw benchmarking data into
actionable initiatives. "The Nuclear Committee discussed how to
best analyze the capital expenditures incurred by our members and
that reside in the EUCG database to determine if there are any
explanatory variables to support the ability to forecast future
capital. We discussed the relevance and predictability of plant
demographics such as technology, age and cost performance, to name
a few, and the multi-factorial nature of these characteristics, in
forecasting the need for capital expenditures," Ward said.
Kelly McNair, EUCG's Information
Technology Committee chair from Oncor Electric Delivery LLC, stated
that his committee, among other topics, discussed the merits of
using a cost estimation model to predict the economic performance
of in-house application development. "Our membership, like most
electric utilities, needs to have reliable, robust econometric
tools to help direct IT project decisions," McNair said. "We are
fulfilling those needs in a collaborative workshop environment that
non-EUCG members are paying consultants to provide, and we are
doing it for a fraction of the cost."
Joe Martucci, chair of EUCG's
Transmission and Distribution Committee from PSEG (NYSE: PEG),
stated that his committee members discussed how to best use their
database for strategic planning and how to incorporate other
industry data to provide a more holistic approach to data-driven
decision making. "The EUCG T&D group discussed broad data
topics such as the year-end results of the North American Electric
Reliability Corporation's Generating Availability Data System (NERC
GADS) along with more specific concerns such as substation bill of
material and estimation. Taken as a whole, our committee focused on
a well-rounded review of industry data, both strategic and
tactical."
Tennessee Valley Authority's Jim
Miller, chair of the Hydro Committee, said that his
committee is interested in identifying leading and lagging
performance indicators. "We spent a significant amount of our
workshop time discussing what constitutes a leading and lagging
indicator of hydro plant performance," Miller said. "We also
continue to be interested in human performance indicators. These
topics will remain at the top of our agenda for the foreseeable
future."
Robert Dool, Fossil Committee
chair from AEP, said that a presentation on industry performance
metrics caught the attention of his group. "Along with our
continued utilization of our generation plant database, the
committee discussed what performance metrics are being used in our
industry and why," explained Dool. "Data are but one element of
gauging plant performance; the metrics companies choose to utilize
provide insights into what each feels are its critical goals. By
performing a periodic review of the industry, we are able to make
adjustments to properly reflect what is best in the industry."
The EUCG Safety Committee continues to build on what
Bill Messner, committee chair from
Southern California Edison, says is a solid foundation for success.
"The Safety and Health Committee held a lot of joint sessions with
the other EUCG committees to discuss emerging and continued safety
issues of the electric utility industry," Messner said. "We also
made significant progress in the design of our database and our
plan to populate it with member data in the near future."
EUCG will hold its 2011 spring workshop in Charlotte, N.C., April
3-6. All electric utilities are encouraged to send
representatives. Interested parties should visit the EUCG website
at http://www.eucg.org for more information about the
organization's next event.
About EUCG: EUCG is a global non-profit association of
energy and electric utility professionals who discuss current and
emerging industry issues, share best practices and exchange data
for benchmarking purposes. The 37-year-old association is organized
into committees that represent specific utility functions:
Transmission & Distribution (T&D), Fossil Plants, Hydro
Plants, Nuclear Plants, Information Technology (IT) and Safety and
Health committees. Members attend semiannual workshops that focus
on strategic planning, maintenance practices, operations
management, outage management and various other aspects of the
electric utility business. Membership is open to all utility
companies and professionals worldwide. Interested parties should
contact Pat Kovalesky, EUCG
Executive Director, at 1-623-572-4140. Email: eucgexec@cox.net .
Website: http://www.eucg.org .
SOURCE EUCG
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