by Bob Shively, Enerdynamics President and Lead Instructor

In our latest issue of Energy Insider I examined the proposed new regulations on U.S. power plant emissions in 2012 and the dramatic effect they may have on the energy business. On December 30, 2011, just two days before the new rules were to go into effect, the The United States Court of Appeals for the D.C. Circuit issued its ruling to stay the CSAPR pending judicial review (see http://www.epa.gov/crossstaterule/
pdfs/CourtDecision.pdf). This means the CSAPR rules cannot go into effect until further ruling by the court.  The ruling requested that parties submit proposed schedules that would allow hearings to be held in April 2012.  However it is uncertain when a decision might be rendered. In the meantime, regulation of SO₂ and NO_x reverts back to the existing Clean Air Interstate Rule (CAIR).  For details on CAIR see  http://www.epa.gov/cair/index.html.

The court decision creates major uncertainty in both electricity and natural gas markets.  A trading program that was set to go into effect for power plants in 28 states is now on hold.  Coal units that seemed sure to be closed gain a new, although possibly temporary, lease on life.  And gas units that planned on running more hours to replace coal now may not find the markets so favorable.  The decision also creates uncertainty as to whether the recently announced Mercury and Air Toxics Standards (MATS)  (see http://www.epa.gov/
mats/basic.html) will be able to survive court challenges.  The result is that all market participants must make decisions under a very uncertain future and that long-term decision making will again fall by the wayside.