New EPA Rules Could Stir The Air

Regulation is the ever-present risk for utility companies, and this came to the fore again this week with new potential EPA pollution regulations. In particular, these rules will target emissions of sulfur dioxide, nitrogen oxides and fine particles. If the EPA gets its way and the rules go into effect, it will mean tougher air pollution standards that affect 31 states in the eastern half of the United States. (Check out Save The Earth: Become A Capitalist.) 

Regulations always come with costs, though, and this one is no different. As the primary producers in the affected areas, American Electric Power (NYSE:AEP), Southern Company (NYSE:SO) and Duke Energy (NYSE:DUK) would face the brunt of the new rules.

Although the EPA says the regulations will add $2.8 billion a year in new costs, you can assume that the industry will disagree and point to higher costs. After all, these companies are going to face tough decisions about buying new technology, switching fuels, and shutting down small plants. Couple that with expected new rules on mercury emissions, and the industry is going to be facing some serious budgeting decisions in the coming years. 


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