Progress Energy 2007 Annual Report Download - page 60

MANAGEMENT’S DISCUSSION AND ANALYSIS
58
North Carolina Attorney General Petition under Section
126 of the Clean Air Act
In March 2004, the North Carolina attorney general filed a
petition with the EPA, under Section 126 of the Clean Air
Act, asking the federal government to force coal-fired
power plants in 13 other states, including South Carolina,
to reduce their NOx and SO2 emissions. The state of North
Carolina contends these out-of-state emissions interfere
with North Carolina’s ability to meet national air quality
standards for ozone and particulate matter. On March 16,
2006, the EPA issued a final response denying the petition.
The EPA’s rationale for denial is that compliance with
CAIR will reduce the emissions from surrounding states
sufficiently to address North Carolina’s concerns. On
June 26, 2006, the North Carolina attorney general filed a
petition in the D.C. Court of Appeals seeking a review of
the agency’s final action on the petition. The outcome of
this matter cannot be predicted.
National Ambient Air Quality Standards
On December 21, 2005, the EPA announced proposed
changes to the National Ambient Air Quality Standards
(NAAQS) for particulate matter. The EPA proposed to
lower the 24-hour standard for particulate matter less than
2.5 microns in diameter (PM 2.5) from 65 micrograms per
cubic meter to 35 micrograms per cubic meter. In addition,
the EPA proposed to establish a new 24-hour standard of
70 micrograms per cubic meter for particulate matter that
is between 2.5 and 10 microns in diameter (PM 2.5-10).
The EPA also proposed to eliminate the current standards
for particulate matter less than 10 microns in diameter
(PM 10). On September 20, 2006, the EPA announced that
it is finalizing the PM 2.5 NAAQS as proposed. In addition,
the EPA decided not to establish a PM 2.5-10 NAAQS,
and it is eliminating the annual PM 10 NAAQS, but the
EPA is retaining the 24-hour PM 10 NAAQS. These
changes are not expected to result in designation of any
additional nonattainment areas in PEC’s or PEF’s service
territories. On December 18, 2006, environmental groups
and 13 states filed a joint petition with the D.C. Court of
Appeals arguing that the EPA’s new particulate matter rule
does not adequately restrict levels of particulate matter.
The outcome of this matter cannot be predicted.
On June 20, 2007, the EPA announced proposed changes
to the NAAQS for ground-level ozone. The EPA proposed
to lower the 8-hour primary standard from 0.08 parts per
million to a range of 0.070 to 0.075 parts per million. The
two alternatives proposed for the secondary standard are
to either establish a new cumulative, seasonal standard
or set the secondary standard as identical to the proposed
primary standard. Depending on air quality improvements
expected over the next several years as current federal
requirements are implemented, additional nonattainment
areas may be designated in PEC’s and PEF’s service
territories. The final rule is expected in March 2008. The
outcome of this matter cannot be predicted.
Water Quality
1. General
As a result of the operation of certain control equipment
needed to address the air quality issues outlined above,
new wastewater streams may be generated at the
affected facilities. Integration of these new wastewater
streams into the existing wastewater treatment processes
may result in permitting, construction and treatment
requirements imposed on the Utilities in the immediate
and extended future.
2. Section 316(b) of the Clean Water Act
Section 316(b) of the Clean Water Act (Section 316(b))
requires cooling water intake structures to reflect the best
technology available for minimizing adverse environmental
impacts. The EPA promulgated a rule implementing
Section 316(b) in respect to existing power plants in
July 2004. The July 2004 rule required assessment of the
baseline environmental effect of withdrawal of cooling
water and development of technologies and measures for
reducing environmental effects by certain percentages.
Additionally, the rule authorized establishment of
alternative performance standards where the site-specific
costs of achieving the otherwise applicable standards
would have been substantially greater than either the
benefits achieved or the costs considered by the EPA
during the rulemaking.
Subsequent to promulgation of the rule, a number of states,
environmental groups and others sought judicial review of
the rule. On January 25, 2007, the U.S. Court of Appeals for
the Second Circuit issued an opinion and order remanding
many provisions of the rule to the EPA. On July 9, 2007,
the EPA suspended the rule pending further rulemaking,
with the exception of the requirement that permitting
authorities establish best available technology controls
for minimizing adverse environmental impact at existing
cooling water intake structures on a case-by-case, best
professional judgment basis. On November 2, 2007, the
Utility Water Act Group and several unaffiliated utilities
filed petitions for writ of certiorari to the U.S. Supreme
Court. On December 3, 2007, 13 states filed an amicus
brief in support of the Utility Water Act Group’s petition.
As a result of these recent developments, our plans and
associated estimated costs to comply with Section 316(b)