Message-ID: <6312512.1075863388614.JavaMail.evans@thyme>
Date: Fri, 10 Aug 2001 10:40:02 -0700 (PDT)
From: jeffrey.keeler@enron.com
To: kevin.mcgowan@enron.com, john.massey@enron.com, trevor.woods@enron.com, 
	scott.affelt@enron.com, vince.middleton@enron.com, 
	rajneesh.salhotra@enron.com, e.taylor@enron.com, 
	kristin.quinn@enron.com, mark.schroeder@enron.com, 
	daniel.reck@enron.com, m..presto@enron.com, rogers.herndon@enron.com, 
	dana.davis@enron.com, j..sturm@enron.com, 
	doug.gilbert-smith@enron.com, robert.benson@enron.com, 
	lloyd.will@enron.com, kristin.walsh@enron.com, rika.imai@enron.com, 
	jason.kaniss@enron.com, mitch.robinson@enron.com, 
	naveed.ahmed@enron.com, john.moore@enron.com, ben.jacoby@enron.com, 
	d..baughman@enron.com, heather.kroll@enron.com, 
	john.llodra@enron.com, drew.tingleaf@enron.com, 
	dave.kellermeyer@enron.com, scott.churbock@enron.com, 
	david.parquet@enron.com, samuel.wehn@enron.com, 
	kelly.brodbeck@enron.com, tim.belden@enron.com, 
	elliot.mainzer@enron.com, steve.swain@enron.com, k..allen@enron.com, 
	scott.neal@enron.com, rodney.malcolm@enron.com, 
	julia.murray@enron.com, dave.roberts@enron.com, 
	heather.mitchell@enron.com, elizabeth.howley@enron.com, 
	bruce.stram@enron.com, mark.dobler@enron.com, chris.holmes@enron.com, 
	scott.watson@enron.com, john.shafer@enron.com, 
	william.kendrick@enron.com, louis.soldano@enron.com, 
	ruth.jensen@enron.com, wayne.lei@enron.com, dennis.norton@enron.com, 
	terry.worrell@enron.com, hap.boyd@enron.com, edwin.moses@enron.com, 
	michael.terraso@enron.com, mary.schoen@enron.com, 
	stacey.bolton@enron.com, lisa.jacobson@enron.com, 
	marc.phillips@enron.com, susan.worthen@enron.com, 
	henry.van@enron.com, gus.eghneim@enron.com, 
	gavin.dillingham@enron.com, robert.moss@enron.com, 
	linda.robertson@enron.com, pat.shortridge@enron.com, 
	d..steffes@enron.com, lisa.yoho@enron.com, margaret.huson@enron.com, 
	janine.migden@enron.com, m..landwehr@enron.com, 
	paul.kaufman@enron.com, alan.comnes@enron.com, 
	steve.montovano@enron.com, m..schmidt@enron.com, 
	rob.bradley@enron.com, david.nutt@enron.com
Subject: New Source Review & Multipollutant Update
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X-From: Keeler, Jeffrey </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=CCDB38B4-D7851F9E-862566B9-7ACCAE>
X-To: Mcgowan, Kevin </O=ENRON/OU=NA/CN=RECIPIENTS/CN=KMCGOWA>, Massey II, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JMASSEY>, Woods, Trevor </O=ENRON/OU=NA/CN=RECIPIENTS/CN=TWOODS>, Affelt, Scott </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SAFFELT>, Middleton, Vince </O=ENRON/OU=NA/CN=RECIPIENTS/CN=VMIDDLE>, Salhotra, Rajneesh </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RSALHOTR>, Taylor, Michael E </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MTAYLOR5>, Quinn, Kristin </O=ENRON/OU=NA/CN=RECIPIENTS/CN=KQUINN>, Schroeder, Mark </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MSCHROED>, Reck, Daniel </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DRECK>, Presto, Kevin M. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=KPRESTO>, Herndon, Rogers </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RHERNDO>, Davis, Mark Dana </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=AB167E54-8EEC877D-862564B5-7715F6>, Sturm, Fletcher J. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=FSTURM>, Gilbert-smith, Doug </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DSMITH3>, Benson, Robert </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RBENSON>, Will, Lloyd </O=ENRON/OU=NA/CN=RECIPIENTS/CN=LWILL>, Walsh, Kristin </O=ENRON/OU=NA/CN=RECIPIENTS/CN=KWALSH>, Imai, Rika </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RIMAI>, Kaniss, Jason </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JKANISS>, Robinson, Mitch </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MROBINS>, Ahmed, Naveed </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NAHMED>, Moore, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JMOORE6>, Jacoby, Ben </O=ENRON/OU=NA/CN=RECIPIENTS/CN=BJACOBY>, Baughman, Edward D. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=EBAUGHM>, Kroll, Heather </O=ENRON/OU=NA/CN=RECIPIENTS/CN=HKROLL>, Llodra, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JLLODRA>, Tingleaf, Drew </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DTINGLEA>, Kellermeyer, Dave </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DKELLE2>, Churbock, Scott </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SCHURBOC>, Parquet, David </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DPARQUE>, Wehn, Samuel </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SWEHN>, Brodbeck, Kelly </O=ENRON/OU=NA/CN=RECIPIENTS/CN=KBRODBEC>, Belden, Tim </O=ENRON/OU=NA/CN=RECIPIENTS/CN=TBELDEN>, Mainzer, Elliot </O=ENRON/OU=NA/CN=RECIPIENTS/CN=EMAINZE>, Swain, Steve </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SSWAIN>, Allen, Phillip K. </O=ENRON/OU=NA/CN=RECIPIENTS/CN=PALLEN>, Neal, Scott </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SNEAL>, Malcolm, Rodney </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RMALCOL>, Murray, Julia </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JMURRAY>, Roberts, Dave </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=32C66EEF-FFAE3F3B-862568C7-56D63A>, Mitchell, Heather </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=59063475-1ED36C52-862568BE-56D136>, Howley, Elizabeth </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=EF9F520A-104424C3-862569A8-7FBE68>, Stram, Bruce </O=ENRON/OU=NA/CN=RECIPIENTS/CN=BSTRAM>, Dobler, Mark </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=FD03C25F-E922BFE-8625697B-63CFE4>, Holmes, Chris </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=B1B96774-5CE9E24D-86256857-6633F1>, Watson, Scott </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=C487AB9F-90C587AE-86256A1F-7B56D9>, Shafer, John </O=ENRON/OU=NA/CN=RECIPIENTS/CN=JSHAFER>, Kendrick, William </O=ENRON/OU=NA/CN=RECIPIENTS/CN=BKENDRI>, Soldano, Louis </O=ENRON/OU=NA/CN=RECIPIENTS/CN=LSOLDAN>, Jensen, Ruth </O=ENRON/OU=NA/CN=RECIPIENTS/CN=RJENSEN>, Lei, Wayne </O=ENRON/OU=NA/CN=RECIPIENTS/CN=GWADDR/CN=HQ4.EM3.WAYNE LEI>, Norton, Dennis </O=ENRON/OU=NA/CN=RECIPIENTS/CN=GWADDR/CN=HQ4.EM3.DENNIS NORTON>, Worrell, Terry </O=ENRON/OU=NA/CN=RECIPIENTS/CN=GWADDR/CN=HQ4.EM3.TERRY WORRELL>, Boyd, Hap </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=86DA8B6C-2BC02398-86256671-68FD2C>, Moses, Edwin </O=ENRON/OU=NA/CN=RECIPIENTS/CN=NOTESADDR/CN=BA5F5925-A34201CB-86256665-7DDA16>, Terraso, Michael </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MTERRAS>, Schoen, Mary </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MSCHOEN>, Bolton, Stacey </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SBOLTON>, Jacobson, Lisa </O=ENRON/OU=NA/CN=RECIPIENTS/CN=LJACOBSO>, Phillips, Marc 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You may have seen recent media reports on the topics of possible EPA action=
 on New Source Review (NSR) regulation and multipollutant legislation, so I=
 wanted to summarize some of the important current developments:

New Source Review:

EPA was asked to conduct a 90-day review of NSR and come up with recommenda=
tions for the larger Bush National Energy Plan.   EPA held several public h=
earings and solicited public comments, which closed July 27.   Enron submit=
ted comments (which I sent by e-mail on 7/30/01).   EPA has indicated that =
it will report to the President only on "impacts of NSR on the power sector=
" on August 17 and delay any specific recommendations for NSR reform until =
mid-September.

Stories in the past few days have suggested that EPA's findings will "ease =
emissions standards" on coal utilities. Such characterizations are somewhat=
 slanted, as they are based on information coming from environmental groups=
 who oppose any NSR reform -- but there is some substantive merit behind th=
ese reports as well.

NSR enforcement over plant modifications has been an extremely contentious =
issue for electric utilities, and many industry sources have been lobbying =
hard to relax EPA enforcement policy.  From an administrative perspective, =
this is a relatively easy reform for  EPA to tackle -- it would only requir=
e a change in "guidance" and not a lengthy regulatory process or legislatio=
n.   As you can see from the attached stories, environmental groups are ext=
remely opposed to this type of action, and are using the media very effecti=
vely to put pressure on EPA against such loosening of NSR enforcement stand=
ards.
EPA will likely recommend a number of broader administrative and legislativ=
e changes to NSR, most requiring a longer trip through the legislative or r=
egulatory process.   Such changes could include reforms to BACT/LAER analys=
is for new or existing sources, relief for cleaner sources, or standardizat=
ion of some of the more arbitrary provisions of NSR.   Given the longer-ter=
m effort required, these proposed reforms may be newsworthy, but less likel=
y to have an impact on the power sector in the short-term.

Some of the recent complicating issues have been calls from other industry =
sectors (manufacturers,  refining, industrial boilers, gas pipelines) for N=
SR relief.  EPA would prefer to address power sector issues only, but may b=
e politically forced to make recommendations in other sectors as well.  It =
is not yet clear what sectors or what issues they will address.

Possible Outcomes/Impacts:  Large coal utilities have spent a great deal of=
 resources putting pressure on the Administration on the modification & enf=
orcement issues.  The issue is the easiest short-term solution to offer fro=
m a regulatory standpoint, so despite environmental group opposition, it is=
 likely that EPA will recommend immediate action in this area, along with l=
onger-term reforms.  For Enron businesses this means that coal, emissions a=
nd power trading should expect renewed strength in the coal generation sect=
or, as older assets would face less barriers to extending their life.  Orig=
ination opportunities (plant upgrades, capacity increases) may increase as =
customers fears about enforcement actions subside.  Industrial and gas pipe=
line sectors may see relief in the modification area as well, if EPA decide=
s to tackle sectors outside just power.  Particularly on gas pipeline issue=
s, turbine maintenance issues may be clear-cut enough for EPA to make a sim=
ple , short term recommendation.

Multipollutant Legislation

Also making news lately were statements by EPA Administrator Christine Whit=
man, indicating that EPA plans to release a proposal to scrap existing emis=
sions regulations (NOx SIP Call/126 Rule, Regional Haze, SO2/Acid Rain) for=
 a more streamlined "multipollutant" plan.  Multipollutant strategies have =
been discussed for some time, but are becoming more newsworthy lately becau=
se they were included as possible options under the Bush Energy Plan, and o=
ffer potential solutions to NSR reform problems.

EPA's proposed elimination of existing air programs is not as drastic as it=
 sounds -- in fact, it offers the opportunity to replace confusing, overlap=
ping programs on multiple pollutants that are currently regulated or will s=
oon be regulated by EPA with a more certain and flexible system.  Prospects=
 for development of a multipollutant trading plan that reforms NSR are much=
 less predictable, however, and will require a longer-term legislative effo=
rt.  =20

In September 2001, we expect to see release of EPA's plan, as well as congr=
essional consideration of several pieces of multipollutant legislation.  We=
 are working closely with EPA, the White House, and Congress on these issue=
s and will continue to keep commercial and corporate groups informed on the=
 progress of multipollutant strategies.   Unless political dynamics change =
drastically, we would not expect final action on multipollutant legislation=
 this year.  As the issue evolves, we will be in touch with more specifics =
on the legislation and Enron's strategy.

If you have questions or would like more information, please contact me.

  =20

Jeffrey Keeler
Director, Environmental Strategies
Enron
Washington DC office - (202) 466-9157
Cell Phone (203) 464-1541






