The US senate has recently rejected a Republican bid to block the EPAs new Cross State Air Pollution Act (CSAPR). The act is an attempt to mitigate sulfur dioxide (SO₂) and nitrogen oxide (NOX) emissions which the EPA has deemed to be hazardous to human health. Under the new rules, the EPA will set emission caps for each State beginning in January 2012, and require States to meet these caps either through reduction or by purchasing offset credits on the open market. The energy industry, namely coal and petroleum electric power producers, are the largest emitters of sulfur dioxide (SO₂).

The cost of compliance with these new regulations is projected to be substantial, resulting in volatile electricity prices starting next year. The North East will be the hardest hit with the cost of electricity projected to increase the most.

This is a still a fluid situation as the EPA could potentially ease off the rules through political pressure before become they come into effect as scheduled January 2012.  If the rules are not relaxed, hedging your future power costs forward is strongly advised. NuEnergen is vigilantly monitoring developments related to this matter and will continue to update our clients on how to manage this potential risk. You can view the new rules at the EPA’s website here:  http://www.epa.gov/airtransport/ .