Impacts to Louisiana’s Energy Supply from EPA Cross-State Air Pollution Rule Paul Miller Assistant to the Secretary

Cross-State Air Pollution Rule (CSAPR) Intended to fix the legal issues surrounding the Clean Air Interstate Rule Replacement for the Transport Rule (July 6, 2010) which was the replacement for the Clean Air Interstate Rule (March 10, 2005) Signed by the EPA Administrator on July 6, 2011 Applies to 28 States including 26 for Ozone Season NOx Emissions

Cross-States Air Pollution Rule (CSAPR) States

States Covered by the Original 2005 Clean Air Interstate Rule

Electric Generating Units Affected in Louisiana 92 Generating Units Affected at 32 Locations across the State of Louisiana Initial Compliance 2012 Ozone Season Major Allowance Shortfalls at all Solid Fuel Generating Units in Louisiana –Big Cajun NRG/Entergy –Rodemacher Cleco/Lafayette/LEPA –Dolet HillsCleco/ AEP –Roy S NelsonEntergy

Cumulative Impacts Ozone Season 2010 Total NOx Emissions 22,869 Tons CSAPR Total La Budget 13,432 Tons (includes new unit set-a-sides) Required Reduction/Allowance Purchase 9437 Tons NOx (based on 2010 Emissions) La Utilities Can Only Purchase 2821 Allowances (Variability) without Triggering the Rule’s Allowance Penalties in Subsequent Year (16253 Tons Max Allowable NOx Emissions)

Impacts Continued An Emissions Total Greater Than 16,253 Tons will Require the Surrender of 2 Additional Allowances from the Subsequent Year Available Pool per Excess Ton of NOx Emitted Using 2010 Emissions 22, , X 2 = 13,232 allowances would have to be surrendered as a penalty in addition to the required allowances for the year

Impacts Continued La CSAPR Budget 37% < CAIR Budget La Utilities Penalized for CAIR Emission Reductions For Example Cleco/AEP/Lafayette/LEPA spent $20 Million installing Low NOx Burner and other Combustion Controls on Dolet Hills and Rodemacher Power Plants in Anticipation of CAIR

Other Considerations Other States have Expressed Concerns over a Lack of Sufficient State Budgets Other State Shortfalls will Result in Few Allowances to be Available in the Market No La Utilities have new Control Projects Underway (2-4 year Projects) EPA Used the IPM Model to determine what Units would Operate utilizing arbitrary factors such as anticipated fuel cost

Impacts to NRG Big Cajun Allowances Emissions5265 Shortfall2423 SCR(s) WILL LIKELY BE REQUIRED COSTS???

Impacts to Dolet Hills 2012 Allowances Emissions2135 Shortfall1079 SCR WILL LIKELY BE REQUIRED ESTIMATED COST $150 MILLION

Impacts to Brame Energy Center 3Units2 Solid Fuel / 1 Natural Gas 2012 Allowances Emissions1858* Shortfall 592 * NEW Unit 3 going thru Shakedown Actual shortfall will be larger SCR Will Likely be Required on Unit 2 as well as some Allowance Purchase

Impacts to Roy S Nelson 2012 Allowances Emissions2021 Shortfall 640 SCR WILL LIKELY BE REQUIRED

Louisiana’s Natural Gas Fueled Generation Generally a Challenge for Older Less Efficient Gas Units Collectively a Greater Challenge Some Older Units may be Forced into Early Retirement Potential Loss of Employment for Louisiana

Questions? Paul Miller (225)