Prairie State Energy Campus, IL, USA

38°16'18"N | 89°40'34"W

Communicating Environmental Regulations: It's Good Business

Michelle Golden, Principal

Environmental Engineer

October 25, 2013

CIVIL GOVERNMENT SERVICESMINING & METALSOIL, GAS & CHEMICALS POWER

Overview

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The US has been and continues to be in a very active period of environmental regulatory change, particularly with respect to energy production.

These regulatory changes impact the short and long-term business strategies of power companies.

Today’s presentation is designed to give you brief highlights of regulations affecting the Power Industry, touch on why this matters to Bechtel Power Corporation and offer tips regarding effective communication of complex topics such as these to business managers.

Regulations Affecting the Power Sector

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1/30/20124

5/25/115

Possible Timeline for Environmental Regulatory Requirements for the Utility Industry

Regulations Affecting the Power Sector

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Air: Transport (CSAPR/CAIR) Ambient Air Quality Standards (NAAQS) Mercury and Air Toxics (MATS) a.k.a. Utility MACT MACT for Industrial Boilers

Climate Greenhouse Gas New Source Performance Standards,

Water: Cooling Water Intakes (Section 316(b)) Steam Electric Effluent Guideline (ELG)

Waste Coal Combustion Residuals (CCR)

Air – Uncertainty is the Status Quo

In 2013, EPA will focus on implementing and defending the suite of air regulations promulgated over last 4 years.

Rule Final

CSAPR July 2011 Vacated – Aug 2012US Supreme Court Review underway

MATS April 2012 Appealed, briefings through spring

MATS – New EGU Reconsideration

March 2013 Timing critical due to GHG NSPS

NAAQS – PM 2.5 Jan 2013 May drive transport rule requirements.

NAAQS – Ozone Feb 2014

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Air Transport : Litigation = Uncertainty

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Clean Air Interstate Rule (CAIR)

– Final regulations published March 2005– Challenged and remanded without vacature July 2008

Cross State Air Pollution Rule (CSAPR)

– Transport Rule to replace CAIR, final July 2011 – Numerous petitions for review and request for stay filed (Consolidated case: EME Homer

City v. EPA)– Court ordered stay 12/29/11, CAIR remains in effect.– CSAPR Vacated August 2012 – Decision 2-1 – EPA requested re-hearing by full panel of 9 judges, re-hearing denied January 24, 2013– EPA petitioned US Supreme Court , granted petition June 2013

What does this mean for the Power industry?

– Ongoing uncertainty – Uncoordinated Air Quality Control System (AQCS) planning/design/schedule

Climate: Greenhouse Gas Regulation

Mandatory Reporting Rules (MRR) – Sept 2009

Endangerment Finding – December 2009

Mobile Source Rule – April 2010

Tailoring Rule – May 2010

GHG Permitting (PSD/BACT & Title V) Guidance – Nov. 2010

Carbon Capture Sequestration Underground Injection Rule – Dec 2010

New Source Performance Standards for Power Plants

– New plants regulations re-proposed September 2013, final rule projected to be published June 2014

– Existing plants proposed rule projected for June 2014

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EPA moving ahead with regulations multiple fronts:

Water Regulations

Steam Electric Power Generating proposed Effluent Limitation Guidelines (ELG)

•Last updated 1982, EPA proposed rule issued June 2013

•Existing ELG retained but standards added for waste streams from AQCS

•Environmental groups pushing EPA to require zero liquid discharge (ZLD); cited by EPA as available technology.

•Final Rule projected May 2014

What are the implications for the Power industry?

•New water treatment facility requirements

•Additional considerations for AQCS retrofits

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Water Regulations

Cooling Water Intake (316(b)) Regulations

Phase I – Final 2001 (new intakes)

Phase II/III addresses existing power plants, other types of facilities.

•Rule proposed March 2011

•Settlement agreement required final rule by July 2013;

•However EPA obtained approval of an extension that requires final rule publication by November 2013

States have been addressing in NPDES renewals

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Waste: Coal Ash

Coal Combustion Residuals (CCR)

Reconsideration driven by TVA impoundment failure (Kingston, TN Dec 2008)

EPA proposed rule (June 2010) sought comments on two approaches

Subtitle C Hazardous Waste Subtitle D Solid Waste

EPA not projecting when this will be finalized, studying impacts of beneficial use

Bills have been floated in Congress to mandate regulation by the States and ban EPA from regulating coal ash.

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Strategic Implications for Power Companies

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Power Industry Challenges

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Proper planning means that utilities and merchant power companies cannot plan for one rule at a time but rather take a comprehensive view to:

Minimize economic impacts to shareholders and consumers

Continue environmental improvements

Maintain system reliability

Maintain fuel diversity options

Obtain access to capital and/or cost recovery

Negotiate myriad political landscapes

Complex, intertwined regulations in place or pending present barriers to new generating units (particularly coal-fired and possibly gas-fired) and require decisions to be made to retrofit or retire existing units.

Communicating Complex Messages to Business Leaders

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Getting the Message Out

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Costs associated with these regulations affect customer decisions to retrofit/retire/replace existing generation.

Senior Management awareness is critical for meeting customer needs and strategic planning.

Challenges:

•Honing the message

•Securing the audience

•Delivering the message effectively

Getting the Message Out

Refining the Message:

– Assess what you think business leaders need to know and why– Prepare your “elevator speech”

Getting the opportunity:

– Target the managers who have the most to gain from the message– Be prepared to be flexible about your delivery

Effective presentation:

– Limit the technical details to those that matter to the mission / business– Make your best effort to assess impact / benefit – Be prepared to get into details if necessary– Be confident!

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Questions?

Michelle Golden

301-228-6043

magolden@bechtel.com

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