Overview of Environmental Performanceof Power Plants in Texas

May 2010

Legislative advertising paid for by: John W. Fainter, Jr. • President and CEO Association of Electric Companies of Texas, Inc.1005 Congress, Suite 600 • Austin, TX 78701 • phone 512-474-6725 • fax 512-474-9670 • www.aect.net

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AECT Principles

• AECT is an advocacy group composed of member companies committed to:

- Ensuring a modern, reliable infrastructure for the supply & delivery of electricity.

- Supporting efficient competitive markets that are fair to customers and market participants.

- Supporting consistent and predictable oversight and regulation that will promote investment and ensure the stability of Texas’ electric industry.

- Promoting an economically strong and environmentally healthy future for Texas, including conservation and efficient use of available resources.

• AECT member companies remain dedicated to providing Texas customers with reliable service and are committed to the highest standards of integrity.

The Association of Electric Companies of Texas, Inc. (AECT) is a trade organization of investor-owned electric companies in Texas. Organized in 1978, AECT provides a forum for membercompany representatives to exchange information about public policy, and to communicate withgovernment officials and the public. For more information, visit www.aect.net.

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A common refrain is that CO2 emissions generated in Texas are higher than inother states. However, it is critical to view that in the context of other truths:

− Texas generates more electricity than any other state; in fact, Texas produces almost80% more electricity than the next most generating state.1

− Much of the CO2 emitted in Texas results from the generation of “products” that arevery significant to our state and nation. For example, Texas produces about:

− 60% of petrochemicals produced in the U.S.− 30% of gasoline and diesel refined in the U.S.− 10% of electricity generated in the U.S.

− The dollars of gross product produced in Texas per ton of CO2 emitted is high, and itincreased by more than 1000% between 1963 and 2001.

− The ratio of the amount of CO2 emitted per MWh of electricity generated in Texas islower than half of the states that have more than a nominal amount of coal-fired or oil-fired electricity generation (see previous slide).

CO2 Emissions in

Context of Texas’ Economy

1Source: EIA, 2008 State Electricity Profiles

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Technical Feasibility of

CO2 Reductions

Technology EIA 2008 Reference Target

Efficiency Load Growth ~ +1.05%/yr Load Growth ~ +0.75%/yr

Renewables 55 GWe by 2030 100 GWe by 2030

NuclearGeneration 15 GWe by 2030 64 GWe by 2030

Advanced CoalGeneration

No Heat Rate Improvementfor Existing Plants

40% New Plant Efficiency by 2020–2030

1-3% Heat Rate Improvementfor 130 GWe Existing Plants

46% New Plant Efficiencyby 2020; 49% in 2030

CCS None Widely Deployed After 2020

PHEV None 10% of New Light-Duty VehicleSales by 2017; 33% by 2030

DER < 0.1% of Base Load in 2030 5% of Base Load in 2030

Chart Source: EEI and EIA

5Source: EPA Clean Air Markets Division – 2008 Acid Rain Program Data

0.103Texas0.222National

2008 NOx EmissionRate Averages

(lbs/mmBtu)Area

Over 80% of the fossil-fueledelectricity produced in Texas

comes from East Texas.

0.395NM

0.103TX

0.247OK 0.223

AR

0.156LA

Texas has the largest emissions of any state since it produces ~80% more power than the next ranked state.

Texas Is Already Leading the Way

in Clean Power Plants

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– HGA SIP- 86% overall reduction from 1997

– DFW SIP- 88% overall reduction from 1997

– Beaumont SIP- 45% reduction from 1997

– East Texas SIP- 51% reduction from 1997

Electric Generator-NOx Reductions Achieved Under

TCEQ 1-hr Ozone SIP Rules

Between 2000 and 2005, electric generatingcompanies in Texas spent over $1 billion on NOx

emission reductions alone.

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Texas’ Electric Generating

Plants Among Lowest NOx

Emitters in the Nation

NOx

0.000

0.100

0.200

0.300

0.400

0.500

0.600

0.700

0.800

SD

ND

NM

NE

OH

UT

KY

WY

IN

MN

TN

PA

DE

MI

MT

KS

MD

CO

DC

OK

AL

VA

MS

MO

WV IL

AR

GA IA

AZ FL

WI

SC LA

NC

VT

WA

NV

OR

NY

TX

NH

NJ

MA

CT

ME

ID RI

CA

Source: EPA Clean Air Markets Division – 2008 Acid Rain Program Data

Texas has the 9th

lowest average NOxemissions rate.

NO

x (

lb/

MM

Btu)

U.S. Average-0.222 lb/mmBtu

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Notes:NOx Emission Rates for New Coal-Fired Power Plants range from 0.05 to 0.08 pounds per million BtuNOx Emission Rates for New Gas-Fired Power Plants are approx. 0.015 pounds per million BtuSource: EPA Clean Air Markets Division – 2008 Acid Rain Program Data

NO

x (

lb/

MM

Btu)

Average Emissions Rates of NOx fromExisting Texas and U.S. Power Plants

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Texas’ Electric Generating

Plants Among Lowest SO2

Emitters in the Nation

SO2 Rank

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

1.800

MD

PA

GA

OH

DE

IN

MI

ND

NH

AL

TN

WV

VA KY

SC

MO

SD

DC NE

NC

WI

IA IL

KS

AR

MN

MS

MA FL

WY

TX

OK

LA

CO NY

NJ

MT

OR

NM

AZ UT

CT

NV

ME

WA

VT

CA RI

ID

Source: EPA Clean Air Markets Division – 2008 Acid Rain Program Data

Texas has the 19th

lowest average SO2emissions rate.

SO

2 (

lb/

MM

Btu)

U.S. Average-0.564 lb/mmBtu

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Average Emission Rates of SulfurDioxide from Existing Texas andU.S. Power Plants

SO

2 (

lb/

MM

Btu)

Source: EPA Clean Air Markets Division – 2008 Acid Rain Program Data

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1995-2008 Emission Rate Trends

Nitrogen Oxides(NOx)

lb./mmBtu

Sulfur Dioxide(SO2)

lb./mmBtu

0.1030.2220.3160.56420080.1030.2370.3210.64420070.1110.2550.3380.70220060.1160.2680.3490.75320050.1240.2860.3530.77920040.1420.3200.3900.81520030.1730.3480.3840.79420020.2210.3730.3850.84320010.2610.3990.3800.87520000.2860.4400.4810.99919990.3070.4810.4851.05819980.3100.5090.5231.09319970.3140.5180.5271.09619960.3130.5510.5171.0861995TexasNationTexasNationYear

1995 - 2002 data are from the Acid Rain Program Scorecard Table B12003 - 2006 data are from the Clean Air Markets Division database for the Acid Rain Program

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Federal Clean Air Interstate Rules (CAIR)− Requires additional NOx and SO2 emissions reductions from power plants in

2009, 2010, and again in 2015, with a cap and trade program.− The NOx and SO2 emissions from all new units must “fit” under the 2009, 2010,

and 2015 caps; such emissions are not in addition to those caps.− TCEQ has recently revised its rules to implement CAIR.

Regional Haze− Requires reductions in NOx, SO2, and Particulate Matter (PM) emissions based

on best available retrofit technology (BART) for different types of facilities,including electric generating units, industrial boilers, and refineries.

− EPA has decided that NOx and SO2 emissions reductions made for CAIR willsuffice for the NOx and SO2 emissions reduction requirements under RegionalHaze.

− The TCEQ is developing rules to implement BART.

AdditionalEmission Reductions

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Giving Back to theEnvironment

• AECT member companies help to improve our environment through stewardship,support for new technologies and partnership with other agencies.

Environmental Stewardship- Reducing releases of chlorofluorocarbons fromelectrical equipment- Recycling coal combustion products- Educating schools and communities aboutrenewable energy- Designating land and reservoirs for publicrecreational use- Preserving and restoring forests by plantingmillions of trees- Helping other industries adopt pollution-prevention plans- Launching education campaigns to helpcommunities save energy- Creating wetlands and wildlife habitats oncompany properties- Reclaimed water utilization- Offering renewable energy products to retailcustomers

Environmental Partnerships

- Climate Challenge Program- Energy Star- Energy Smart Schools- Environment Research Program

- EPA SF6 Partnership program

- Mickey Leland Internship Program-TCEQ Teaching Environmental Science- Green Lights- Habitat Protection- Learning From Light!- Millennium Council- Million Solar Roofs- National Energy Education Development(NEED) Project- Natural Gas Star

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Selected EnvironmentalPrograms and Fees

• The electric industry is among the most heavily regulated in the nation, complyingwith hundreds of regulations and paying millions of dollars in fees annually.

Selected Current

Environmental Programs

- Compliance with National Ambient Air QualityStandards- State Implementation Plan- NOx reductions for electric generating units- Clean Air Interstate/Clean Air Mercury Rules- New Source Review (NSR)Prevention of Significant Deterioration- Non-attainment NSR, including offset- State Minor NSR- Title V and Acid rain permits- Compliance Assurance Monitoring- Continuous Emissions Monitoring Systems- Toxic Release Inventory- Monitoring cooling water- Mass Emission Cap and Trade Program

Selected Current

Environmental Fees

- Title V federal operating permit fees- Air inspection fees- Air quality permit fees- Air quality permit renewal fees- Wastewater inspection fees- Wastewater permit application fees- Water quality fees- Potable water fees- Water use permit application fees- Hazardous waste generation fees- Non-hazardous waste fees- Low level radioactive waste fee- Injection well fee

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Q&A