1. Issue History and State Advocacy Campaign COOLING WATER INTAKE STRUCTURES RULE: § 316(b)

2. CWA Section 316(b) requires that cooling water intake structures reflect the best technology available (BTA) for minimizing adverse environmental impacts EPA is crafting rule to set national performance standards Central question is what constitutes BTA? –Once-through v. closed cycling cooling (cooling towers) –Other technologies or operating conditions to address “impingement” (trapping organisms against screens) and “entrainment” (passing organisms through the cooling system) of aquatic life –Debate is once size-fits-all vs. flexible site-specific technology requirements –Unintended environmental, energy and economic consequences at issue –Need for cost-benefit balancing crucial At Issue

3. 1970s – Present: States exercising best professional judgment and making site-specific BTA decisions 1993: Riverkeeper suit forced promulgation of § 316(b) rules 2001: Rules for “new” generation facilities completed History

4. 2004 – Phase II rule established national standards for impingement and entrainment. –Specified a range of qualifying technologies –Rejected cooling towers as a single BTA, due to excessive costs. –Allowed site specific decision making based on cost-benefit analyses 2007 – Second Circuit remanded the rule in part denying cost- benefit analysis and implied cooling towers should be deemed BTA 2009 – U.S. Supreme Court decided EPA has discretion to use cost- benefit analysis 18 states participated in an amicus brief including: AL, AR, CO, FL, IN, KS, KY, LA, MI, MO, NE, ND, NM, SC, TN, TX, VA, WV. 2010 – EPA consolidates Phase II-III rulemaking for completion by July 2012 History

5. Fuel neutral – affects ALL steam electric facilities Number & overall capacity of affected facilities large –>400 power plants affected –40% of U.S. Generation; 55% nuclear capacity; 28% fossil capacity –312 GW affected (EPRI) Once-through facilities distributed throughout U.S. Retrofits: $65 billion capex cost (>$215-$220/kw) –Total compliance numbers significantly higher Retrofits result in 2-4% lost capacity Agency studies conclude reliability impacts (NETL, NERC, DOE) –2008 DOE / NERC study found that 39,500 Mw would be prematurely closed due to retrofit mandate –2010 NERC identified 33-36 gigawatts (GW) of capacity that may be economically vulnerable to retirement if the proposed EPA rule requires facilities to convert to closed-cycle cooling systems. Exposure

6. Questionable benefits to be realized – harm isn’t occurring in many situations –Cost: Towers are prohibitively expensive; difficult to retrofit –Affects plant economics, efficiency and electricity prices –Emissions: Additional GHG and particulate emissions –Other environmental concerns: fogging, icing, space consideration, noise, aesthetics –Permitting: Increase in particulate emissions may preclude permitting –Water Use: Towers consume more water than once- through systems (2x) Environmental Consequences

7. Energy –Capacity reduction due to efficiency losses (2-4%) –Extended outages – vary, some companies report 40+ months –Resource margin adequacy, reliability difficulties, load balancing concerns –NY ISO forecast 1/5 of generation resources may retire –Insufficient compliance time may not allow for development of replacement capacity Price increases –CA: Forecast 6-9% increase Energy & Price Consequences

8. Site-specific technology decisionmaking Multiple technology options – e.g., physical barriers, collection systems, diversion technology, behavioral barriers, operational changes, exist and are proven. Meaningful cost-benefit test. Includes: 1.Demonstration that technology is “effective” at site 2.Determine technology is “affordable” at site 3.Cost-benefit calculation to determine benefits exceed costs (or is not “wholly disproportionate”) Industry Perspective

9. Settlement Agreement Just Reached Proposed rule expected March 14, 2011 Final Rule due July 27, 2012 17 months to take comment, respond to comment and issue final rule – uncharacteristically short –August 18, 2011 – EPA to complete public comment review –January 19, 2012 – EPA to complete senior options briefing Timing & Schedule

10. Targets Outreach Education Deliverables Communication State Advocacy Campaign

11. Governors Attorneys General State Legislators Mayors Other Targets

12. In state –State Capitol –In district Annual/Regional meetings –Past: RGA, RAGA, SGAC –Over the next month: ALEC, NCSL –Future efforts to include all major groups Simultaneous efforts occurring at the Federal level Outreach

13. Fall/Winter meetings –Opportunity to provide background information –Follow up in Spring/Summer Lobby pieces/one pagers Timeline –EPA –EEI/NEI Efforts Education

14. Meetings –Individual meetings with state and local elected officials –Reporting of meeting outcome/follow up Letters –Individual letters from each group (Govs, AGS, etc.) –Sent to EPA, OMB, DOE and White House –Initial deadline for State Legislators letter – 3/15/2011 Deliverables

15. Database –System to keep track of contacts, notes, signatories –Eliminate duplication of contacts –One central source for all information Weekly Report –Fax/E-mail document for tracking of activity Communications from EEI/NEI –Regular issue updates –Latest from EPA Communications

16. Informational packets to be sent to state reps – hard copy and electronically, including: –Webinar materials –Copies of all letters of support –Instructions on how to collect state legislator signatures 1.Collect signature 2.Report back to EEI/NEI points of contact 3.EEI/NEI points of contact collect signature details –Talking points Action Item Tools

17. EEI –Meg Hunt mhunt@eei.org 202.508.5634mhunt@eei.org –Rich Bozek rbozek@eei.org 202.508.5641rbozek@eei.org NEI –Marshall Cohen mc@nei.org 202.739.8051mc@nei.org –Michael McGarey mfm@nei.org 202.739.8118mfm@nei.org –Christine Csizmadia cmc@nei.org 202.739.8033cmc@nei.org Contact Information