ERCC: California Lawsuit Costly to Environment, Energy Efficiency

2/27/2003

From: Frank Maisano, 202-466-7391 or 202-297-1502 (cell)

WASHINGTON, Feb. 27 -- Scott Segal, the director of the Electric Reliability Coordinating Council (ERCC), released the following statement regarding today's NSR lawsuit by California Attorney General Bill Lockyer. ERCC is a group of power-generating companies working to make the Clean Air Act more rational and effective:

"Today, Attorney General Bill Lockyer filed a petition challenging efforts to improve the effectiveness of a part of the federal Clean Air Act, known as 'new source review.' ERCC is disappointed in the decision made by General Lockyer.

"Clarification of the NSR program is needed to allow for energy efficiency projects to proceed in a timely fashion. By standing in the way of efficiency improvements, the current interpretation of NSR undermines protection of human health and the environment. By following the lead of the New York Attorney General, California is contributing to legal uncertainty at the expense of the California environment and consumers.

"No one knows better than Bill Lockyer that energy efficiency is the best way to protect the environment. In June 2001, Lockyer actually sued for greater efficiency standards, noting in part that, 'California is among the leading states when it comes to conserving energy and Californians are working even harder to reach new energy-saving goals.' Yet today, the Attorney General takes an action that could undermine efficiency goals. It is inconceivable that encouraging efficiency for air conditioners is good for the environment, but doing so for power plants is not.

"The Attorney General argues that the EPA rules diminish state flexibility. ERCC strongly disagrees. The majority of state actors have welcomed NSR clarification. In fact, clarifying NSR restores the cooperative federalism upon which the Clean Air Act is based. Here are three clear reasons why:

"First, states now and in the future will possess the right to adopt clean-air programs more stringent than the federal base program. If some state legislatures have adopted laws conforming state and federal programs, it is their choice to do so. Having states and the federal government agree on a clear interpretation of NSR is actually an exercise of states rights.

"Second, the reinterpretation of the NSR program in the 1999 enforcement initiative remains the far greater threat to state prerogatives. State air regulators based upon a common understanding of the Clean Air Act approved maintenance activities undertaken by utilities. The federal government reversed twenty years of this understanding in filing its 1999 cases - a clear diminishment of states rights.

"Third, and most importantly, bringing clarity to the question of routine maintenance enhances the environmental protection of the program by stimulating innovation and efficiency at older plants. As Howard Gruenspecht from the respected environmental think-tank Resources for the Future and Robert Stavins of Harvard University recently wrote, 'Research has demonstrated that the New Source Review process drives up costs tremendously (not just for the electricity companies, but for their customers and shareholders, that is, for all of us) and has resulted in worse environmental quality than would have occurred if firms had not faced this disincentive to invest in new, cleaner technologies.'"