ComEd 2015 Annual Report Download - page 35

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Section 111 of the Clean Air Act. Pursuant to the Climate Action Plan, President Obama directed the EPA to regulate new and modified fossil fired
generating units under Section 111(b) of the Clean Air Act. The EPA finalized the rule in August 2015, and the final rule has been challenged in the
U.S. Court of Appeals for the District of Columbia.
Under the President’s memorandum, the EPA was also required to finalize a rule to establish CO emission reduction requirements for
existing fossil-fuel generating stations under Section 111(d) of the Clean Air Act. The final rule, known as the Clean Power Plan, became effective
on December 22, 2015. The rule sets GHG emission reduction targets for each state, with reductions beginning in 2022, and the target achieved
by 2030. States must submit an implementation plan to the EPA by September 2016, unless granted an extension of up to two years. States are
granted latitude to select from a number of compliance options, which are designed to achieve the reductions in the most cost-effective manner.
The final rule has been challenged in the U.S. Court of Appeals for the District of Columbia. On February 9, 2015, the U.S. Supreme Court issued
a stay of the Clean Power Plan until the disposition of the petitions challenging the rule now before the Court of Appeals, and, if such petitions are
filed in the future, before the U.S. Supreme Court. While the ultimate impact of the Clean Power Plan rule is expected to be favorable, Exelon and
Generation cannot at this time predict to what extent the states’ actions to comply with the Clean Power Plan’s emission reduction targets will
impact their future financial position, results of operations and cash flows.
 After a two-year program review, the nine northeast and mid-Atlantic states
currently participating in the Regional Greenhouse Gas Reduction Initiative (RGGI) released an updated RGGI Model Rule and Program Review
Recommendations Summary on February 7, 2013. Under the updated RGGI program the regional RGGI CO budget was reduced, starting in 2014,
from its previous 165 million ton level to 91 million tons, with a 25 percent reduction in the cap level each year from 2015 through 2020. Included in
the program are provisions for cost containment reserve (CCR) allowances, which will become available if the total demand for allowances, above
the CCR trigger price, exceeds the number of CO allowances available for purchase at auction. (CCR trigger prices are $6 in 2015, $8 in 2016 and
$10 in 2017; after 2017 the CCR price increases by 2.5 percent each year). Such an outcome could put modest upward pressure on wholesale
power prices; however, the specifics are currently uncertain.
At the state level, the Illinois Climate Change Advisory Group, created by Executive Order 2006-11 on October 5, 2006, made its final
recommendations on September 6, 2007 to meet the Governor’s GHG reduction goals. At this time, the only requirements imposed by the state of
Illinois are the energy efficiency and renewable portfolio standards in the Illinois Power Act that apply to ComEd.
On December 18, 2009, Pennsylvania issued the state’s final Climate Change Action Plan. The plan sets as a target a 30 percent reduction
in GHG emissions by 2020. The Climate Change Advisory Committee continues to meet quarterly to review Climate Action Work Plans for the
residential, commercial and industrial sectors. The Climate Change Action Plan does not impose any requirements on Generation or PECO at this
time.
The Maryland Commission on Climate Change was chartered in 2007 and released a greenhouse gas reduction strategy with 42
recommendations on August 27, 2008. The plan’s primary policy recommendation to formally adopt science-based regulatory goals to reduce
Maryland’s GHG emissions was realized with the passage of the Greenhouse Gas Emissions Reduction Act of 2009 (GGRA) which requires
Maryland to reduce its GHG emissions by 25 percent below 2006 levels by 2020. It also directed the Maryland Department of Environment to
prepare and implement an action plan which was published in October of 2013. Maryland’s electricity consumption reduction goals, required under
the “EmPOWER Maryland” program, and mandatory State participation in RGGI Program, are listed as the energy sector’s contribution in the plan.
The plan also advocated raising the renewable portfolio standard requirement from 20% by 2022 to 25% by 2022. The Department of Environment
was required to submit a December 2015 report to the Governor and General Assembly
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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