ComEd 2013 Annual Report Download - page 240

responsibilitywasapproximately$0.2million.Generation madethefinal payment inJanuary2014andiscomplyingwiththeConsent
Decree.
Air Quality
Cross-State Air Pollution Rule (CSAPR). OnJuly11,2008, theU.S. Court ofAppealsfor theDistrictofColumbiaCircuit(D.C.
CircuitCourt)vacatedtheCAIR, which hadbeen promulgatedbytheU.S. EPAtoreducepower plant emissionsofSO
2andNO x.
TheD.C. CircuitCourt later remandedtheCAIRtotheU.S. EPA,without invalidatingthe entire rulemaking, sothat theU.S. EPA
couldcorrectCAIRinaccordancewiththeD.C. CircuitCourt’s July11,2008opinion.OnJuly7,2011,theU.S. EPApublishedthe
final rule,knownastheCSAPR.TheCSAPRrequires28statesintheeastern halfoftheUnitedStatesto significantlyimproveair
qualitybyreducingpower plant emissionsthat cross state linesandcontribute to ground-level ozone andfine particle pollution in
other states.
NumerousentitieschallengedtheCSAPRintheD.C. CircuitCourt,andsomerequestedastayofthe rule pendingtheCourt’s
consideration ofthematter on themerits. OnDecember 30,2011,theCourt grantedastayoftheCSAPR,anddirectedtheU.S.
EPAtocontinue theadministration ofCAIRintheinterim. OnAugust21,2012,athree-judge panel oftheD.C. CircuitCourt held
that theU.S. EPAhasexceededitsauthorityincertainmaterial aspectsoftheCSAPRandvacatedthe rule andremandedittothe
U.S. EPAfor further rulemakingconsistent withitsdecision.TheCourt alsoorderedthat CAIRremainineffect pendingfinalization of
CSAPRonremand. TheCourt’s order wasappealedto theU.S. SupremeCourt,where oral argument washeldon December 10,
2013.Adecision is expectedsometimeduring2014.
Under theCSAPR,generation unitswere to receive allowancesbasedon historic heat input andintrastate,andlimitedinterstate,
tradingofallowanceswaspermitted. TheCSAPRrestrictedentirelytheuseofpre-2012 allowances. ExistingSO
2allowancesunder
theARPwouldremainavailable for useunder ARP. AsofDecember 31,2013,Generation had $56 million ofemission allowances
carriedat thelower ofweightedaveragecostormarket.
EPA Mercury and Air Toxics Standards (MATS). TheMATS rule becamefinal on April16, 2012.TheMATS rule reduces
emissionsoftoxic air pollutants, andfinalizedthenewsource performancestandards for fossilfuel-firedelectric utilitysteam
generatingunits (EGUs). TheMATS rule requirescoal-fired EGUs to achievehigh removal ratesofmercury, acid gasesandother
metalsfromairemissions. Toachievethesestandards, coal unitswithno pollution control equipment installed(uncontrolledcoal
units) will havetomakecapital investmentsandincur higher operatingexpenses. Itis expectedthat smaller,older,uncontrolledcoal
unitswill retire rather than maketheseinvestments. Coal unitswithexistingcontrolsthat do not meet therequiredstandards may
needto upgradeexistingcontrolsor add newcontrolsto comply. Inaddition,thenewstandards will require oilunitsto achievehigh
removal ratesofmetals. Ownersofoilunitsnot currentlymeetingthe proposedemission standards maychoosetoconvert theunits
to lightoilsor natural gas, install control technologiesor retire theunits. TheMATS rule requiresgeneratingstationsto meet thenew
standards three yearsafter the rule takeseffect,April16, 2015, withspecific guidelinesfor an additional one or twoyearsinlimited
cases. NumerousentitieshavechallengedMATS intheD.C. CircuitCourt,andExelon wasgrantedpermission by theCourt to
intervene insupport ofthe rule.Adecision by theCourt is expectedsometimeduring2014. The outcomeofthe appeal,andits
impactonpower plant operators’ investment andretirement decisions, is uncertain.
Exelon,alongwiththeother co-ownersofConemaugh GeneratingStation are movingforwardwithplansto improvetheexisting
scrubbersandinstall SelectiveCatalytic Reduction (SCR)controlsto meet themercuryremoval requirementsofMATS.
Inaddition,asofDecember 31,2013,Exelon hada$698 million net investment incoal-firedplantsinGeorgiaandTexassubjectto
long-termleasesextendingthrough 2028-2032. While Exelon currentlyestimatesthevalue ofthese plantsat theendofthe lease
termwill beinexcess oftherecordedresidual leasevalues, after theimpairment recordedinthesecondquarter of2013,final
applicationsoftheCSAPRandMATS regulationscouldnegativelyimpacttheend-of-lease termvaluesoftheseassets, which could
result inafuture impairment loss that couldbematerial.
National Ambient Air Quality Standards (NAAQS). TheU.S. EPA previouslyannouncedthat itwouldcomplete a reviewofall
NAAQS by 2014. Oral argument inthelitigation (State of Miss. v. EPA)ofthefinal 2008ozone standardoccurredintheD.C. Circuit
Court inNovember 2012 andafinal Court decision was issuedon July23,2013 withthe 2008primaryozone standardupheld, but
thesecondarystandardremandedto EPAfor reconsideration.Concurrent withlitigation ofthe 2008ozone standard, theU.S. EPA
continuesitsregular,periodic reviewoftheozone NAAQS andisexpectedto proposerevisionsinthefall of2014, withpreliminary
indicationsthat theU.S. EPAwill likelyproposeatightenedstandard. Itis unclear at this point intimewhether theU.S. EPAwill be
able to respondto theCourt remandofthesecondary2008ozone standardon a timeframethat wouldbeanyquicker than that of
234