1. Clear Skies Act of 2003 Western regional Air Partnership April 2-3, 2003

2. Clear Skies: where are we in this process? On February 27, 2003, Chairman Billy Tauzin and Chairman Joe Barton introduced the Clear Skies Act in the U.S. House of Representatives, and Senator George Voinovich and Chairman Jim Inhofe introduced the legislation in the Senate by request of the Administration. The Administration is committed to working with Congress to pass multi- pollutant legislation: –The first subcommittee hearing has been scheduled for April 8 th. –A second hearing is being considered for early May.

3. What will Clear Skies do? 69%15 (2018)26 (2010)48Mercury (tons) 67%1.7 million (2018)2.1 million (2008)5 millionNitrogen Oxides (tons) 73%3 million (2018)4.5 million (2010)11 millionSulfur Dioxide (tons) % Reduction at full implementation Phase 2 CapPhase 1 Cap2000 Emissions Advantages from enactment of multi-pollutant legislation: –Immediate and long-term health and environmental benefits –Less burden on State and local governments –Lower costs for industry and consumers Clear Skies sets forth a mandatory program that would reduce and permanently limit power plant emissions.

4. Clear Skies and the WRAP Clear Skies is designed to support the WRAP process and ensure environmental integrity; in addition to a national constraint on SO 2, the bill provides a backstop to the WRAP’s voluntary emissions reduction goals in nine states: –If for any reason the WRAP’s voluntary reductions do not achieve the regional emissions goal set by the WRAP for 2018 (271,000 tons for the power sector), a separate “WRAP cap” is triggered to ensure that the regional reductions are preserved. –This cap can also be triggered by 2013 if there is sufficient evidence that the target will not be met by 2018.

5. Projected Emissions Reductions from Electricity Generating Units Under Clear Skies Lower Midwest: AR, LA, TX, OK, NM. Mountain: ND, SD, MT, WY, CO, UT. Southwest: CA, NV, AZ, HI. Northwest: WA, OR, ID, AK. Subsequent to the development of the latest version of the model used to project power plant emissions, SO 2 control equipment has been installed at the Centralia Plant in Washington. Since emission reductions from the installation of these controls were not included in the base case modeling, the amount of reductions expected under Clear Skies, as well as the benefits associated with those reductions, will be lower in the state of Washington (Region X) than projected.

6. NOx and some mercury and SO 2 controls are installed; low-NOx burners play a key role. We anticipate a minor amount of new combined-cycle. No repowering of existing coal-fired units. Generation mix changes little from our “basecase” by 2020. Controls and Generation in the West….* Note: The West includes the states in Zone II of Clear Skies. The information presented here reflects EPA's modeling of the Clear Skies Act of 2002. The Agency is in the process of updating this information to reflect modifications included in the Clear Skies Act of 2003. Clear Skies provides flexibility for power producers in the West to meet rapidly growing electricity demand through clean generation. –Electricity demand growth in Western states is expected to be among the most rapid in the U.S. over the next twenty years.

7. ….and on the National Scene Note: 2020 national coal production projections are EPA estimates from IPM. 1990 data: Coal Industry Annual 1994, Table 4 (DOE/EIA-0584 (2000)). 2000 data: Coal Industry Annual 2000, Table 4 and Table 63 (DOE/EIA-0584 (2000)), January, 2002. 2020 production for the power generation sector: Derived from the Integrated Planning Model. 2020 production for other sectors: Derived from the National Energy Modeling System. 2000 National Coal Production 2020 National Coal Production under CSA 1990 National Coal Production Resources required for construction of control technologies: –Boilermaker labor is likely to be limiting in the first few years of the program due to the simultaneous installation of SCR for the NOx SIP call.

8. Preliminary Findings of Financial Analysis No coal plants are forecasted to retire (because the alternative is to build new gas plants). Industry will be able to finance the required investment: –Industry has obtained $90 billion in financing in the past five years –Nationally, $28 billion is projected for pollution controls between 2005-2020. Financial impacts are limited and do not affect the financial stability of companies because of: –the phased-in nature of the program –the continued regulation of many coal plants –price setting by gas-fired generation under deregulation Note: The information presented here reflects EPA's modeling of the Clear Skies Act of 2002. The Agency is in the process of updating this information to reflect modifications included in the Clear Skies Act of 2003.

9. Quantified Costs and Benefits in the West* Increased power production costs are about $300 million annually in 2020 – and vary widely among the Western states. There are two main Western benefits that we can quantify: –Annual health benefits are approx. $1 billion in 2020, including: Avoided premature deaths due to fine particles. over 160,000 additional days without respiratory symptoms. approximately 2,700 additional days without asthma attacks. approximately 24,000 fewer days of missed work. –Visibility: benefits in just 3 parks total hundreds of millions of dollars. Visibility benefits in the Grand Canyon alone estimated to be $40 million annually by 2020. Visibility improvements are also projected to improve tourism. Note: The West includes the states in Zone II of Clear Skies. The information presented here reflects EPA's modeling of the Clear Skies Act of 2002. The Agency is in the process of updating this information to reflect modifications included in the Clear Skies Act of 2003.