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Cinergy Corporation
Comments from Cinergy Corporation
J. Michael Geers, P.E.
Senior Engineer
May 30, 2000
I have reviewed the most recent copy of the "Final Guidance Document on Output-Based NOx Allowance Allocations." EPA has made significant changes to this document from the previous draft, adding substantial detail and greatly improving the document. Nonetheless, Cinergy continues to believe that the states would be best served by EPA providing them with the most comprehensive information possible. Only with full information can states appropriately evaluate the option of allocating allowances on an output basis. While the document in many instances describes the benefits and shortcomings of different choices, it continues to omit any discussion of one significant issue - namely, the policy and legal issues associated with using output-based allowance allocations.
As discussed in our January 12, 2000 comments, Cinergy has significant concerns about including non-emitting EGUs as potential recipient of NOx allowances. As you know, non-emitting EGUs have no need for allowances for compliance purposes. Thus, allocation of allowances to such an entity would amount to a financial enrichment of that entity at the expense of sources with a valid compliance benefit. In addition, there are many other policy and legal questions surrounding inclusion of non-emitting EGUs, including whether EPA and the states even have the legal authority to distribute allowances to non-NOx-emitting units. These issues have been discussed in previous comments by Cinergy and other stakeholders. (As you know, the workgroup was not given the opportunity to address these issue.)
Cinergy believes that the states are best served by identifying these issues and providing complete background information on the implications of such an allowance allocation scheme. Specifically, Cinergy feels that it is disingenuous to offer to the states such a radical and questionable concept without giving them the balanced information that would allow a full evaluation of whether such an allowance allocation approach makes sense from a legal and policy perspective. Cinergy therefore requests that EPA revise the document to include a discussion of this issue, including the concerns raised by Cinergy and other organizations. If you have any questions, please call me at (513) 287-3839.
J. Michael Geers, P.E.
Senior Engineer
Cinergy Corp.