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              United States         Air and
              Environmental Protection   Radiation
              Agency           (6204J)
                                          EPA 430-K-94-Q12
                                          September 1994
   &EPA   Acid  Rain Program
               Update No. 1

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                Purpose of this Update
The U.S. Environmental Protection Agency (EPA) intends to publish
a  periodic  report on  the  progress of  Acid Rain  Program
implementation. This is the first report of the series and it focuses
on activities since the 1993 publication of the Acid Rain Program
Final Core Rules.


           The Acid Rain Program
ACID 08 RAIN  Update No. J
   o a H A u
           Update Highlights

           To date, utilities have met all permitting deadlines under the Acid
           Rain Program.

           All 182 Phase I SO2 permits have been issued.

           Emissions Monitoring and Tracking

           Initial,monitor certification tests indicate that the Continuous
           Emissions Monitoring Systems (GEMS) required by the Acid Rain
           Program are the most accurate systems used for national
           environmental compliance.

           247 of 292 utility units on a Phase I schedule have a complete set
           of certified GEMS.

          The Emissions Tracking System (ETS) has received the first three
          quarterly emissions reports from utilities.

          Allowance Market Activity

          Over 1 million allowances have already been traded, signalling the
          development of a healthy allowance market. Allowance trading
          activity increased dramatically from 1992 to 1993.

          EPA announced the opening of the Allowance Tracking System
          (ATS) on March 14,  1994.

          EPA, in partnership with the Chicago Board of Trade, has held
          two  annual allowance auctions and direct sales events. The
          proceeds from these events total almost $50 million.

          Energy Efficiency and Renewable Energy

          A total of 930 bonus allowances has been awarded to  utilities for
          energy efficiency and renewable energy measures. It is estimated
          that, through these measures, the awarded utilities have avoided
          approximately 1,800 tons of SO2 and  1,300 tons of NO
          emissions.                                       x


             The Acid Rain Program
f B O <3  R * U


           P R O Q R A U
                       The Acid Rain Program
                       Update No. 1
                       Emissions Monitoring and Tracking	
                       The integrity of the allowance market depends on state-of-the-art
                       continuous emissions monitoring systems (OEMS) and an emissions
                       tracking system (ETS). The CEMS record all emissions from, each
                       utility affected by the program. This emissions data is electronically
                       reported to ETS on a quarterly basis. This update reports on the
                       installation and operation of the CEMS and the ETS.
      "The results of the
monitoring tests revealed
   performance results."
      Continuous Emissions Monitoring Systems

      O   As required under the Clean Air Act, CEMS for.SO2, NOX,
          opacity, and volumetric flow were installed and put into
          operation at 256 utility units by November 15, 1993. At 95%
          of the utility units carbon dioxide (CO2) monitors, which are
          optional under the Act were also installed.

      O   As of August 1, 1994. emission monitors for SO2, NOX, flow,
          opacity and CO2 were tested and certified for accuracy by
          the utilities and approved by EPA at 247 units. At 13 units
          CEMS were rejected or deemed incomplete. Those units will
          revise their applications and resubmit them to EPA.

      O.   The results of the monitoring tests revealed unprecedented
          performance results. Specifically, SO2 monitors on average
          were accurate to within 3.60 percent of EPA's reference
          measurements and NOX monitors within.3.77 percent.
                        Prior to the Acid Rain Program, SO2 and NOX monitors were only
                        required to be within 20 percent of the EPA reference standard.
                        The dramatic improvement in monitor accuracy is attributable to
                        a  combination  of tight  performance  standards,  innovative
                        incentives for testing,  and conscientious quality assurance and
                        control by industry.


                       The Acid Rain Program
                       Update No. 1
                       Allowance Market Activity
                       The SO2 allowance trading system harnesses the incentives of the
                       free market to reduce pollution at the lowest possible cost In order
                       to stimulate the allowance trading market, EPA holds annual
                       auctions and direct sales of allowances. The Allowance Tracking
                       System (ATS) ensures that utilities do not emit more SO2 than the
                       number of allowances they hold. The ATS does not, however,
                       record the price of allowances; such information is collected and
                       reported by the private sector. This report provides records of
                       allowance transactions and allowance prices as reported in the
                       trade press, along with 1994 EPA auctions results and an update
                       on allowance transactions recorded in ATS.
  'Most allowances hgve
   traded in the $150-250
range...an Indication thet
  the Acid Rain Program
may be costing much less
       than expected."
     Allowance Transactions Prior to the Allowance
     Tracking System

     O   Allowance transactions have been reported by the trade
          press, utilities, and other sources since 1992.

     O   Observations:

          •   Over 1 million allowances have already been traded, if
              allowance options are included.

          •   Most allowances have traded in the $150-250 range.
              This price is well below projections made in 1990 of
     _        $400-1000 per allowance, an indication that the Acid
              Rain Program may be costing much less than expected.
                       Allowance Tracking System

                       O   On March 14, 1994, EPA|s Allowance Tracking System
                            opened for business. The ATS provides an efficient,
                            automated means of tracking allowance holdings essential to
                            determining compliance with the Acid Rain Program.


             The Acid Rain Program
             Update No.  1
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             The Acid Rain Program
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           The Acid Rain Program
           Update No. 7
P R O a B A u
           Energy Efficiency and Renewable Energy

           One of the goals of the Acid Rain Program is to promote pollution
           prevention through energy efficiency and renewable energy. The
           Conservation and Renewable Energy Reserve is a pool of 300,000
           allowances set aside to award utilities that invest in efficiency and
           renewable energy. This report provides a list of the utilities that
           have been awarded bonus allowances from the Reserve, and the
           pollution they have avoided through their efficiency and renewable
           energy projects.
           The Conservation and Renewable Energy Reserve

           O   EPA began accepting applications to the Reserve on July 1,

           O   On November 17, 1993, EPA announced the first six utilities
               to be awarded allowances from the Reserve, and on April 29,
               1994, EPA announced the second group of awardees. The
               third group of allowance awardees will be announced in the
               fall of 1994.

           O   The following applicants have received bonus allowances
               from the Reserve.
City of Austin
Centerior Energy
(Cleveland Electric and Toledo Edison)
Connecticut Light & Power
Dayton Power & Light
ESI Energy
(Florida Power and Light)
Minnesota Power
No. Of
. 8


    A    . The Acid Rain Program
P R O a B A M
           Current Publications

           O    Do The Acid Rain SO2 Regulations Apply to You?
                (EPA 430/R/94/002, February 1994)

           O    The Add Rain Program - It's Working
                (EPA 430/F/92/027, June 1993)

           O    The Environmental Benefits of Reducing Acid Rain
                (EPA 430/F/92/026, June 1993)
           Continuous Emissions Monitoring

           O    Emissions Monitoring and Tracking: Assuring
                Reductions in Acid Rain
                (EPA 430/F/94/004, May 1994)

           O    The Acid Rain Program OEM Certification Handbook:
                A Step by Step Guide

           O    The Acid Rain Program OEM Policy Guidance
           Allowance Trading System

           O   The Allowance Tracking System: Accounting for SO2
                Allowances Under the Acid Rain Program
                (EPA 430/F/94/002, February 1994)

           O   The Allowance Tracking System: An Introduction for
                Authorized Account Representatives
                (EPA 430/F/94/001, February 1994)


           The Acid Rain Program
           Update No. 1
           Acid Rain Regulations
           PR Pub. Date
           05/23/91      Auctions, Direct Sales & IPPs Written Guarantees
                         40 CFR Part 73
           01 /11 /93      General Provisions and Permits
                         40 CFR Part 72
           01 /11 / 93      Allowance System
                         40 CFR Part 73
           01/11/93      Continuous Emissions Monitoring
                         40 CFR Part 75
           01/11/93      Excess Emissions
                         40 CFR Part 77
           01 /11 / 93      Administrative Appeals
                         40 CFR Part 78
           03/23/93      Allowance Allocations & Reserves
                         40 CFR Part 73
           09/24/93      Opt-In Program, for Combustion Sources (Proposed
                         40 CFR Part 74
           11 /18/93      Permits and Allowance System (Proposed
                         40 CFR Parts 72 & 73
           03/22/94      Nitrogen Oxides Emission Reduction Program
                         40 CFR Part 76