We also are proud of our record in pursuing a third goal that is becoming more and more important each year—meeting the demand for electricity in an environmentally sensitive manner. The industry's principal air emissions are down dramatically since 1980. Sulfur dioxide (SO₂) emissions have dropped by more than 40%, and nitrogen oxide (NO_x) emissions are down by about 45%. As a side benefit, mercury emissions have also been cut by about 40%. Perhaps surprisingly, the industry's use of coal as a fuel source for generating electricity has increased 75% during this period.

With Congress now considering close to a dozen bills to address the country's carbon dioxide (CO₂) and other greenhouse gas (GHG) emissions, and with the demand for electricity expected to rise by 40% over the next 25 years, electric companies are pursuing a variety of short- and long-term strategies to continue making progress on all three goals in the future. These strategies are based on the development and deployment of a full suite of advanced technology options.

Today's Actions

The EPA's Clean Air Mercury Rule (CAMR) sets a declining national cap on mercury emissions in two distinct phases, 2010 and 2018. The first phase cap is 38 tons beginning in 2010, with a final cap set at 15 tons beginning in 2018. When fully implemented, this will reduce electric utility mercury emissions by nearly 70% from 1999 levels.

CAVR, the Clean Air Visibility Rule, is intended to improve visibility in national parks and wilderness areas by reducing haze. States with protected areas must develop their implementation plans by December 2007. They are required to identify older industrial facilities and power plants that affect visibility in the federal areas and then set emissions limits for those facilities that can be achieved using emission controls known as best available retrofit technology, or BART. States that adopt the CAIR cap-and-trade program for SO₂ and NO_x are allowed to apply CAIR controls as a substitute for controls required under BART because, according to EPA, the CAIR controls are "better than BART."

Another short-term strategy is to expand the role of energy efficiency. Energy efficiency has been and will remain a crucial vehicle for helping customers get more use out of every kilowatt-hour of electricity generated. Now, by adopting innovative technologies such as "smart" meters and plug-in hybrid electric cars, energy efficiency can deliver even more value and environmental protection.

The industry also recognizes that the time has come to integrate efficiency with its planning and operations. Electric companies realize that because of their unique role as energy providers, they are the logical candidate to promote efficiency to their customers. Electric companies also have the scope and scale to make a difference in promoting efficient technologies, and they can do so at a favorable cost of capital.

The Edison Electric Institute (EEI) and its member companies are now engaged with federal agencies, state regulators, industry allies, and other stakeholders to transform the role of energy efficiency within the electric power industry. To assist this effort, EEI's Board of Directors recently formed the Institute for Electric Efficiency (IEE). This new organization will act as a forum to promote best energy-efficiency practices among electric utilities, to develop a resource base of regulatory models, and to convene conferences and seminars to promote the sharing of information, ideas and experiences in energy efficiency in the power sector. The new institute will work closely with the Electric Power Research Institute (EPRI), which is focused on how utilities and their customers can best use technology to increase their efficient use of electricity.

In the Future

A "safety valve" or upper limit on the price that a regulated entity would have to pay for carbon emission allowances is critical. A safety valve is essential for limiting economic harm to electricity customers and the nation and for protecting the country's international competitiveness. The safety valve also should be set at a reasonably low level. This would still enable it to send a price signal, while eliminating price volatility.

To reduce the GHG emissions from coal plants significantly, however, will require technology that can capture, transport, and store their CO₂ emissions. And to develop these technologies will require an aggressive and sustained commitment by the industry and policy makers. But doing so will be very costly. And before they can be used on a large scale, these technologies will require that we as a nation create a commercial track record for them.

There are also significant legal and regulatory issues to address surrounding procedures for siting and permitting these plants. Consequently, it is vital that any legislative deadlines for capturing and storing carbon be consistent with the availability of technology for doing so.

The industry has already begun to deploy a variety of advanced coal plants to reduce air emissions. And it has begun work in developing technologies for capturing carbon emissions. Listed below are examples by technology type.

Integrated gasification combined cycle (IGCC)

• At present, there are two operating IGCC power plants in the United States: the 260-MW plant owned by TECO Energy in Polk County, Florida, and a 292-MW facility in West Terre Haute, Indiana, which was recently sold by Duke Energy to the Wabash Valley Power Association.
• Duke Energy and Vectren Energy Delivery of Indiana have filed an application with the Indiana Utility Regulatory Commission to construct an approximately 630-MW IGCC plant in Edwardsport, Indiana.
• American Electric Power (AEP) is seeking regulatory approval to build commercial-scale IGCC plants in West Virginia and Ohio.
• Edison International and BP have proposed a 500-MW IGCC plant in Carson, California, that would use petroleum coke produced at California refineries. The captured CO₂ would be transported by pipeline to an oil field and injected into reservoir rock formations thousands of feet underground, both stimulating additional oil production and permanently trapping the CO₂.

• Dominion Virginia Power, a subsidiary of Dominion, has submitted an application with the state for permission to build a 585-MW CFB plant in Wise County. The primary fuel would be coal, with the potential to burn up to 20% biomass.
• Cleco Corp., based in central Louisiana, has announced that it will build a 600-MW CFB plant that will use petroleum coke, a by-product of the oil-refining process, and other solid materials as its fuel source. The plant is scheduled to open in mid-2009.

• AEP is planning a 600-MW ultra-supercritical pulverized coal plant in Arkansas.
• MidAmerican Energy Co. is completing an advanced 790-MW supercritical power plant at its Council Bluffs Energy Center in Iowa.
• Duke Energy Carolinas is planning to construct an 800-MW supercritical plant in North Carolina.

• The nation's electric companies also are advancing a number of CCS projects. AEP announced three separate CCS projects. AEP will install a chilled ammonia post-combustion project on its 1,300-MW Mountaineer Plant in New Haven, West Virginia, in 2008. The 30-MW product validation will capture up to 100,000 metric tons of CO₂ per year that will be stored in deep saline aquifers at the site.

Following the validation at Mountaineer, AEP plans to install a chilled ammonia post-combustion system on one of the 450-MW coal-fired units at its northeastern station in Oologah, Oklahoma, in late 2011. The system is expected to capture about 1.5 million metric tons of CO a year that will be used for enhanced oil recovery.

AEP also plans to conduct a feasibility study of oxy-coal combustion technology. Following a pilot demonstration, AEP will select an existing AEP plant site for commercial-scale installation. The oxy-coal combustion technology is expected to be in service on an AEP plant in the 2012–2015 period.

Milwaukee-based We Energies is conducting a yearlong demonstration of a chilled ammonia system at its 1,210-MW power plant in Pleasant Prairie, Wisconsin. During this time, EPRI will conduct an extensive test program to collect data and evaluate technology performance. Results of the demonstration project are anticipated to be published in late 2008.

FirstEnergy Corp. is planning pilot-scale testing of an electro-catalytic oxidation technology at its R.E. Burger Plant in Shadyside, Ohio, by early 2008. Once captured, the CO₂ will be transported to an 8,000-foot test well that was drilled at the Burger Plant earlier this year and then sequestered underground.

FutureGen

The program goals are to capture and store more than 90% of a 275- MW pilot plant's CO emissions, with the potential for almost 100%. In addition, the plant will

• remove more than 99% of its SO₂ output
• cut NO_x emissions to less than 0.05 pounds per million BTU
• reduce particulate releases to less than 0.005 pounds per million BTU
• eliminate more than 90% of the mercury emissions
• have an availability factor of more than 85%.

The nation's electric companies also are continuing their voluntary efforts to reduce GHG emissions with the federal government. Since 1994—when EEI joined with then Vice President Al Gore and the DOE in the Climate Challenge—the electric utility industry has led all other industrial sectors in reducing GHG emissions. In fact, the industry's voluntary efforts in the year 2000 alone eliminated an estimated 237 million metric tons of CO₂ emissions—nearly two-thirds of the total reductions and offsets reported to the government that year. Through various programs now under way—including Power Partners, the Asia-Pacific Partnership on Clean Development and Climate (APP), and individual company efforts—that commitment continues today.

The long-term goal of the APP is to establish an information flow between the member nations on engineering concepts and best practices' experiences of new coal-based plant technologies, such as IGCC units, and the related issues of CCS.

In November 2006, AEP, Southern Company, and TECO Energy hosted power plant site visits for more than 100 utility executives and government officials from the participating nations. The weeklong series of visits created the opportunity to share information and ideas on building cleaner, more fuel-efficient, coal-based power plants. This visit was followed by AEP, Alliant, Ameren, and Southern Company attending a site visit last April in Japan, which focused on ultrasupercritical coal-based power plants. And this past August, Duke Energy and First Energy held the second U.S.-based site visit. This focused on pumped storage and hydropower technologies.

More site visits are now being organized through the Edison Foundation, a nonprofit organization dedicated to bringing the benefits of electricity to families, businesses, and industries worldwide. The site visits will focus on a variety of technologies to reduce carbon emissions, including pumped storage/hydro, preventative maintenance/ optimization, renewable energy, energy efficiency/demand side management, and transmission and distribution.

The country's demand for an affordable, reliable, and environmentally sensitive electricity supply continues to grow. So too do the challenges in supplying it. But we are confident that our experience and commitment, coupled with advanced technologies and the support of our stakeholders, will give us the foundation we need to see the job through.