Exelon 2014 Annual Report Download - page 33

establish CO2emission regulations for existing stationary sources. The second rulemaking, under Section 111(d) of the Clean Air
Act, focuses on modified, reconstructed and existing fossil power plants. The proposed rule was published in the Federal Register on
June 18, 2014, and the public comment period closed on December 1, 2014. The Climate Action Plan calls for the rule to be finalized
no later than June 1, 2015, and requires that states submit to U.S. EPA their implementation plans no later than June 30, 2016.
Regional and State Climate Change Legislation and Regulation. 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
CO2budget 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 between 2015-2020. Included in the new 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
CO2allowances available for purchase at auction. (CCR trigger prices are $4 in 2014, $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 42 greenhouse gas reduction strategy, climate
action plan, 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 is required to submit a December 2015
report to the Governor and General Assembly on progress towards the 25% mandate; its costs and benefits; the need for target
adjustments; and the status of federal programs. In 2016, the Legislature will review the progress report, its economic impacts on
manufacturing sector and other information and determine whether to continue, adjust or eliminate the requirement to achieve a 25%
reduction by 2020.
Exelon’s Voluntary Climate Change Efforts. In a world increasingly concerned about global climate change and regulatory action to
reduce GHG, Exelon’s low-carbon generating fleet is seen by management as a competitive advantage. Exelon remains one of the
largest, lowest carbon electric generators in the United States: nuclear for base load, natural gas for marginal and peak demand,
hydro and pumped storage, and supplemental wind and solar renewables. As further legislation and regulation imposing
requirements on emissions of GHG and air pollutants are promulgated, Exelon’s low-carbon, low-emission generation fleet will
position the company to benefit from its comparative advantage over other generation fleets.
Based on an independent third-party verification of Exelon’s GHG performance through year-end 2013, it achieved the Exelon 2020
goal of abating 17.5 million tonnes of GHG emissions annually, seven years ahead of plan. Exelon’s approach for addressing the
issue of climate change is currently focused on continuing to manage its GHG emissions from internal operations, contributing to
reducing overall grid GHG emissions and ensuring the resiliency of its infrastructure in response to the physical impacts of climate
change.
Renewable and Alternative Energy Portfolio Standards
Thirty-nine states and the District of Columbia have adopted some form of RPS requirement. Illinois, Pennsylvania and Maryland
have laws specifically addressing energy efficiency and renewable energy initiatives. In addition to state level activity, RPS
legislation has been considered and may be considered again in the future by the United States Congress. Also, states that currently
do not have RPS requirements may adopt such legislation in the future.
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