Progress Energy 2006 Annual Report Download - page 57

Progress Energy Annual Report 2006
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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 U.S. Circuit Court of Appeals for
the District of Columbia Circuit 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.
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. The outcome of this matter cannot
be predicted.
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 important provisions of the
rule to the EPA. As a result of that decision, our plans
and associated estimated costs to comply with Section
316(b) will need to be reassessed and determined in
accordance with any revised or new implementing rule
once it is established by the EPA. Costs of compliance
with a new implementing rule are expected to be higher,
and could be significantly higher, than estimated costs
under the July 2004 rule. Our most recent cost estimates
to comply with the July 2004 implementing rule were
$60 million to $90 million, including $5 million to $10 million
at PEC and $55 million to $80 million at PEF. The outcome
of this matter cannot be predicted.
3. North Carolina Groundwater Standard
On September 14, 2006, the North Carolina Division of
Water Quality (NCDWQ) appeared before the North
Carolina Environmental Management Commission and
recommended the state’s groundwater quality standard for
arsenic be revised to 0.00002 milligrams/liter. The existing
groundwater quality standard for arsenic is 0.05 milligrams/
liter. The North Carolina Environmental Management
Commission granted approval for NCDWQ staff to publish
a notice in the North Carolina Register and schedule public
hearings. The rulemaking process will require at least
six months before the standard may be changed. Trace
amounts of arsenic are commonly present in coal fly ash
sluice water, coal pile runoff, flue gas desulphurization
byproducts, and other coal combustion byproducts. The
specific requirements of the rule as finally adopted and
associated costs, if any, cannot be predicted.
OTHER ENVIRONMENTAL MATTERS
Global Climate Change
The Kyoto Protocol was adopted in 1997 by the United
Nations to address global climate change by reducing
emissions of CO2 and other greenhouse gases.
The treaty went into effect on February 16, 2005.
The United States has not adopted the Kyoto Protocol,
and the Bush administration favors voluntary programs.
There are proposals and ongoing studies at the state
and federal levels to address global climate change
that would regulate CO
2
and other greenhouse gases.
Reductions in CO2 emissions to the levels specified by
the Kyoto Protocol and some additional proposals could
be materially adverse to our financial position or results
of operations if associated costs of control or limitation
cannot be recovered from ratepayers. The cost impact of
legislation or regulation to address global climate change
would depend on the specific legislation or regulation
enacted and cannot be determined at this time. We
have articulated principles that we believe should be
incorporated into any global climate change policy. While
the outcome of this matter cannot be predicted, we are
taking voluntary action on this important issue as part
of our commitment to environmental stewardship and
responsible corporate citizenship.
In a decision issued July 15, 2005, the U.S. Court of Appeals
for the District of Columbia Circuit denied petitions for
review filed by several states, cities and organizations