Exelon 2014 Annual Report Download - page 30

and regulations and its strategies and efforts to protect and improve the quality of the environment, including Exelon’s climate
change and sustainability policies and programs, as discussed in further detail below. The Exelon Board has also delegated to its
Generation Oversight Committee authority to oversee environmental, health and safety issues relating to Generation. The respective
Boards of ComEd, PECO and BGE, which each include directors who also serve on the Exelon board, oversee environmental,
health and safety issues related to ComEd, PECO and BGE.
Air Quality
Air quality regulations promulgated by the U.S. EPA and the various state and local environmental agencies in Illinois, Maryland,
Massachusetts, New York, Pennsylvania and Texas in accordance with the Federal Clean Air Act impose restrictions on emission of
particulates, sulfur dioxide (SO2), nitrogen oxides (NOx), mercury and other pollutants and require permits for operation of emissions
sources. Such permits have been obtained by Exelon’s subsidiaries and must be renewed periodically. The Clean Air Act
establishes a comprehensive and complex national program to reduce substantially air pollution from power plants.
See MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for
additional information regarding clean air regulation in the forms of the CSAPR, the regulation of hazardous air pollutants from coal-
and oil-fired electric generating facilities under MATS, and regulation of GHG emissions, in addition to NOVs issued to Generation
and ComEd for alleged violations of the Clean Air Act.
Water Quality
Under the Clean Water Act, NPDES permits for discharges into waterways are required to be obtained from the U.S. EPA or from
the state environmental agency to which the permit program has been delegated and must be renewed periodically. Certain of
Generation’s power generation facilities discharge industrial wastewater into waterways and are therefore subject to these
regulations and operate under NPDES permits or pending applications for renewals of such permits after being granted an
administrative extension. Generation is also subject to the jurisdiction of certain other state and regional agencies and compacts,
including the Delaware River Basin Commission and the Susquehanna River Basin Commission.
Section 316(b) of the Clean Water Act. Section 316(b) requires that the cooling water intake structures at electric power plants
reflect the best technology available to minimize adverse environmental impacts, and is implemented through state-level NPDES
permit programs. All of Generation’s and CENG’s power generation facilities with cooling water systems are subject to the
regulations. Facilities without closed-cycle recirculating systems (e.g., cooling towers) are potentially most affected by changes to the
existing regulations. For Generation, those facilities are Clinton, Dresden, Eddystone, Fairless Hills, Gould Street, Handley, Mountain
Creek, Mystic 7, Oyster Creek, Peach Bottom, Quad Cities, Riverside, Salem and Schuylkill. For CENG, those facilities are Calvert
Cliffs, Nine Mile Point Unit 1 and R.E. Ginna.
On October 14, 2014, the U.S. EPA’s final Section 316(b) rule became effective. The rule requires that a series of studies and
analyses be performed to determine the best technology available, followed by an implementation period. The timing of the various
requirements for each facility is related to the status of its current NPDES permit and the subsequent renewal period. There is no
fixed compliance schedule, as this is left to the discretion of the state permitting director.
The rule does not require closed-cycle cooling (e.g., cooling towers) as the best technology available to address impingement and
entrainment of aquatic life at a facility’s cooling water intake structure. The rule provides the state permitting director with significant
discretion to determine the best technology available to limit entrainment (drawing aquatic life into the plants cooling system)
mortality, including application of a cost-benefit test and the consideration of a number of site-specific factors. After consideration of
these factors, the state permitting agency may require closed cycle cooling, an alternate technology, or determine that the current
technology is the best available. The rule also provides a number of flexible compliance options to reduce impingement (trapping
aquatic life on screens) mortality, which likely will be accomplished by the installation of screens or other technology at the intake. A
number of concerns raised by the electric generation industry about the proposed rule were resolved favorably in the final rule.
Until the compliance requirements are determined by the applicable state permitting director on a site-specific basis for each plant,
Generation cannot estimate the effect that compliance with the rule will have on the operation of its and CENG’s generating facilities
and its future results of operations, cash flows capital expenditures, and financial position. Should a state permitting director
determine that a facility must install cooling towers to comply with the rule, that facility’s economic viability would be called into
question. However, the likely impact of the rule has been significantly decreased since the final rule does not mandate cooling
towers as a national standard, and the state permitting director is required to apply a cost-benefit test and can take into consideration
site-specific factors.
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