Dismissing administration and industry pressure to cut the cost of federal regulation, the Enviromental Protection Agency yesterday proposed tough and expensive new clean air rules for future coal-fired power plants.
The propsed rules would force utilities to install "scrubbers" - at an estimated cost of $10 billion - on the roughly 200 new power plants expected to be built by 1990. The cost makes the rules the most expensive ever proposed by the agency.
The announced rules represent the latest round of an administration balancing act that calls for increased use of coal as a power source, a continued commitment to cleaner air, and a desire to reduce the inflationary effects of federal regulations.
EPA Administrator Douglas Costle said the proposed rules would cost the average residential energy consumer between 30 cents and $1.10 on a monthly electric bill, and increase of 2 percent.
But, Costle cautioned reporters at a press conference, "We openly present today's proposal with mixed conclusions and a quest for more knowledge." Costle said that the public will have 60 days to comment on the proposed rules, and said he welcomed the discussion because the question of how to implement the Clean Air Act Amendment of 1977 "has been a difficult one for this agency."
EPA proposal calls for sulfur dioxide emissions to be reduced by 85 percent, particulars by 99 percent and nitrogen dioxide by 35 percent.
The sulfur dioxide reduction is the most expensive and controversial. It has been the focal point of industry's fight against what it calls overregulation.
Although Costle stressed that the regulation could be changed considerably when the EPA issues it in final form six months from now, industry spokesmen were alarmed at the fact that the recommendation leaned to the toughest possible regulations.
The Edison Electric Institute, an industry association, said the proposal would cost the American electricity consumer $3.19 billion extra in 1990, "some 2 1/2 times the figure which would result from the industry's approach to the clean air problem," said John J. Kearney, senior vice president of the institute.
EPA has estimated that utilities will spend more than $475 billion for new power plants between now and 1990.
Costle said yesterday's proposed rules would increase those capital expenditures "by approximately $10 billion, which is an increase of about 2 percent."
He added that less stringent restrictions could result in higher expenditures because "more power plants will be contructed."
While Kearney said he was "glad that adminstrator Costle is still actively considering alternative recommendations," he was at the same time concerned that Costle's staff had prepared a press release he said strongly advocates the toughest possible standards.
"Far from summarizing or supporting ideas voice in [Costle's] prepared statement, [the press release] appears instead to be recapitulation of the partisan arguments made to date by the proponents of full scrubbing," Kearney said.
For his part, Costle said, "I want to emphasize strongly that today's proposal is not final and that all the options under discussion will continue to receive consideration - all options. I urge spirited and thoughtful debate on the issues arising from these options.
EPA staff memebers have been wrestling for months with several problems assocaited with the new proposed rules.
Many staffers fer that a full scrubbing standard - as proposed - will result in utilities shifting from the more expensive low-sulfru coa to dirtier and cheaper high-sulfur coal, since the scrubbers will remove the sulfur content anyway. The adminstration has been encouraging utilities to shift to the more expensive but cleaner low-sulfur coal.
More important, the Energy Department and president Carter's top economic advisers have been working with EPA on the proposed standards in an attempt to cut their inflationary impact. DOE even made its own proposals for sliding standards of sulfur removal and a "partial scrubbing." option.
There has also been considerable controversy in the industry and the adminstration over the effectiveness of the scrubber. The chemical-mechanical system that washes sulfur dioxide out of gases going up stacks of oil or coal-burning plants has had problems with reliability.
But EPA believes scrubbers are good enough, and sources in the agency say they decided to push for the strictest regulation in spite of the DOE proposal "because it is easier for utilities to plan for the worst and scale down later if the rules are softened."
Costle himslef has fueled the administration debate over the standards. He said in a written statement yesterday that a plant burning low-sulfur coal with, only partial scrubbing "is cleaner than if the same plant burned high-sulfur coal using full scrubbing.
"The partial scrubbing alternative would allow utilities to trade off the money that would be spent on extra scrubber capacity for more expensive low-sulfur coal," he said.
EPA sources said privately that the $10 billion figure was "soft, and the numbers are constantly changing."
One of the problems in coming up with a standard has been the extreme sensitivity of cost projections relating to various alternatives, the sources said.
"Variables like the price of oil in 1989, or the cost of transporting coal on railroads can change the overall cost estimates drastically," said one source. "The fact is, we dont really know how much it will cost. There are too many ifs."