Progress Energy 2007 Annual Report Download - page 61

Progress Energy Annual Report 2007
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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
In 2006, the North Carolina Environmental Management
Commission granted approval for North Carolina Division
of Water Quality (NCDWQ) staff to publish a notice in the
North Carolina Register and schedule public hearings
regarding the NCDWQ’s recommendation to revise
the state’s groundwater quality standard for arsenic to
0.00002 milligrams/liter from 0.05 milligrams/liter. To date,
no further action has been taken by the NCDWQ staff on
this matter.
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, including the state of Florida, to address
global climate change that would regulate CO2 and
other greenhouse gases. See further discussion of the
executive orders issued by the governor of Florida to
address reduction of greenhouse gas emissions under
“Other Matters – Regulatory Environment.”
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 action on this important issue as discussed under
“Other Matters – Increasing Energy Demand.” In 2007, we
issued a corporate responsibility summary report, which
discusses our actions, and in 2006, we issued our report to
shareholders for an assessment of global climate change
and air quality risks and actions. While we participate
in the development of a national climate change policy
framework, we will continue to actively engage others in
our region to develop consensus-based solutions, as we
did with the Clean Smokestacks Act.
In a decision issued July 15, 2005, the D.C. Court of Appeals
denied petitions for review filed by several states, cities
and organizations seeking the regulation by the EPA of CO2
emissions from new automobiles under the Clean Air Act,
holding that the EPA administrator properly exercised his
discretion in denying the request for regulation. The U.S.
Supreme Court agreed to hear the case and on April 2,
2007, it ruled that the EPA has the authority under the Clean
Air Act to regulate CO2 emissions from new automobiles.
The impact of this decision cannot be predicted.
New Accounting Standards
See Note 2 for a discussion of the impact of new
accounting standards.