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May 11, 2012
Article Authored by Brattle Economists Addressing Environmental Compliance for Coal Plants Published in The Electricity Journal

An article authored by economists at The Brattle Group on the challenges that current and forthcoming environmental regulations pose on utility coal plants has been published in the April 2012 issue of The Electricity Journal.

The article discusses how the future of utility coal plans remains uncertain due to declining gas prices and the dispatching of wind generation, both of which have resulted in record low operating rates for coal plans in the United States. This has been compounded by the Environmental Protection Agency’s pending and future environmental regulations that may force coal plant owners to either make costly investments in order to comply, or shut down operations entirely.

Facing a changing and uncertain regulatory landscape, both plant owners and regulators have critical decisions to make regarding their compliance strategy. The authors contend that utilities need to develop a strategy that is compliant with environmental regulations, acceptable to state regulators, and leaves the utility financially sound. The article outlines a three-step process for utilities and regulators to evaluate their options and strategies: (1) review its technology options; (2) develop a plan to address the regulatory review process of its options; and (3) assess the financing options and cost recovery options through rates.

The article, “State Regulatory Hurdles to Utility Environmental Compliance,” was authored by Brattle principals Philip Hanser and Metin Celebi, and senior consultant Bin Zhou.