PROFITS AND POLLUTION SOAR
Driven by its dirty independent power business during the April-June second quarter, Edison International (EIX) celebrated its own headlines last Tuesday, August 9, as Chicago suffered its ninth air pollution alert day of 2005:

Edison International swings to a profit, ups outlook aolpf5.marketwatch.com/news/newsfinder/pulseone.asp={49C90DC4-2B07-41DD-90AD-919FAC6727DF}

Edison International Posts Higher-Than-Expected Profit aolsvc.news.aol.com/business/article.adp.

Chicago- based Midwest Generation is part of the Rosemead, California-based EIX independent power business which drove profits for EIX in the second quarter and expected to show extremely high profits during the extreme heat experience during the third quarter. Midwest Generation operates for EIX the Fisk and Crawford power-plants, two of the more ¼ of all Illinois’ dirty-23 grandfathered power-plants it operates in Illinois, the biggest single sources of air pollution in the city and state.


G-ROD HIRES DALEY’S EX TO BE POINT MAN FOR DIRTY POWER
Last month Governor Milorad “Rod” Blagojevich selected Henry L. Henderson to lead his effort at the Midwest Governors Association to develop a regional strategy to reduce power-plant emissions, www.illinois.gov/PressReleases/ShowPressRelease.cfm. As much as anything, it serves as a distraction from the fact that with a simple swipe of his pen, Governor Blagojevich can mandate that the dirty-23 in Illinois clean their act. www.chicagoparent.com/main.asp.

Henry Henderson was Mayor Daley’s choice to be Chicago’s first Commissioner of Environment (1992-1998), a city now widely recognized as the dirtiest big city in America www.rd.com/content/openContent.do. Among the accomplishments Henderson’s claims while in office is the city-wide recycling program, now widely recognized as a failure, and a clean air initiative that failed to bring Chicago air in compliance with minimum federal standards for public health.

In 2000, Henderson co-founded Policy Solutions, LTD. www.policysolutionsltd.com along with a 10 year veteran of BP Amoco, the multi-national petro-chemical company. Not surprisingly, after leaving city office Henderson has a contract with the City of Chicago. Among the accomplishments of Policy Solutions Ltd are studies on weakening environmental regulations that mandate clean burning gasoline in Chicago and criticizing regulatory restraints on rising gasoline prices www.policysolutionsltd.com. Policy Solutions LTD clients include the Illinois Petroleum Council and the American Petroleum Institute. Dimming hopes for real progress for clean air in Chicago and the Midwest, Henderson’s Policy Solution LTD claims Midwest Generation as a client.


DIRTY POWER PLANS
In 1998, the utility industry plan for Midwest governors was revealed www.consciouschoice.com/1995-98/cc115/note115.html. The memo from a prominent utility lobbyist outlined a strategy in which the Midwest governors would push a weak proposal for mandating power-plant modernization but couch it as progress. The utility companies would then “audibly grumble about the stringency of the proposal and be prepared to complain about the costs and the difficulty of complying with the established deadlines.” Nowadays, when governors the likes of Blagojevich, whose Illinois EPA says coal is not dirty 64.70.252.93/Clips%20for%20Web/Clips%20after%2006-10-05%20Crash/July%202005%20Prt%202/Chicago%20Daily%20Herald%20-%20Clean%20Coal%20Conundrum%2007-11-05.pdf or neighboring Wisconsin Governor Jim Doyle (D), who is backing a new coal plant for the shore of Lake Michigan that will be one of the largest coal plants ever built www.chiefengineer.org/content/content_display.cfm/seqnumber_content/2129.htm, there is not much grumbling from them.


AUTOCATALYTIC
In writing why some societies fail, Jared Diamond in Guns, Germs and Steel describes the autocatalytic process, that is one that speeds up at a rate that increases with time, feeding off itself. Note:

Thought to be going extinct when exempted from the 1970 Clean Air Act, the grandfathered coal-fired power-plants production boomed in 1992 when Congress deregulated wholesale electricity sales. www.ewg.org/reports/upinsmoke/pr.html. Emissions of the global warming gas carbon dioxide increased from the increased production from the grandfathered power-plants. www.cleartheair.org/proactive/newsroom/release.vtml. In the summer of 2005, global warming's signature X-treme weather disrupts coal shipments in Wyoming, driving up prices of coal and also, in response, natural gas. aolsvc.news.aol.com/business/article.adp. Despite the disruption, Midwest Generation expects to receive enough coal "to generate power at historical levels" according to its second-quarter earnings report to the Securities & Exchange Commission (in the past, rising price of fossil fuel would hurt utility profits, but in today’s regulatory environment “utilities are able to pass along costs to consumers without hurting the bottom line,” according to Barry James, executive vice president of James Investment Research, a mutual fund firm based in Alpha, Ohio). Some companies report using their coal plants less at night to conserve supplies to burn during the day when it is more profitable, ozone concerns put aside. During the X-treme heat wave of 2005, grandfathered power-plants increase power generation and thus CO2. Go to global warming and more X-treme weather and profits for dirty power, nitrogen oxide, sulfur dioxide, carbon dioxide and mercury for everybody.

Add to the above: plans being formulated, promoted by Exelon’s bank account, to increase Chicago’s electric rates by 10%. The idea is a cash infusion to utility companies will spur investment in new generating capacity ("Exelon generates new rate worries" chicagobusiness.com/cgi-bin/news.pl). The Illinois Commerce Commission plan for Illinois utilities to increase reliance on renewable sources is completely voluntary on behalf of the utility companies. ("ICC adopts governor's plan on sustainable energy" suntimes.com/output/business/cst-fin-wind20html). Go to more coal, more CO2, global warming, more X-treme weather and profits for dirty power, nitrogen oxide, sulfur dioxide, carbon dioxide and mercury for everybody.


NSR SOS
The backstop for the grandfathered power-plants in the Clean Air Act is the New Source Review (NSR) process. It provides that a grandfathered plant that makes changes to increase its power generation capability must then install modern state-of-the-art pollution control measures. In nonattainment areas like Chicago the facility must meet the "lowest achievable emission rate," in other areas the standard is slightly less stringent -- "best available control technology."

In June the Bush EPA reinforced its rule change that allows grandfathered power-plants to cause massive pollution increases as a result of construction activities that cost up to 20% of the entire value of rebuilding a facility, without installing any additional pollution control equipment. www.earthjustice.org/news/display.html. In the federal courts this summer, NSR came to a dead end in a ruling that grandfathered power-plants that modernize to operate for longer hours may do so without having to install improved pollution control devices. www.msnbc.msn.com/id/8245899/


CAP AND TRADE IS SLASH (A LITTLE HERE) AND BURN (MORE THERE)
Richard Sandor, the Chicagoan who proposed the current Kyoto cap-and-trade system for carbon dioxide, attributes cap and trade of pollution emissions to the failures of politicians and regulators. Charles Rankin, co-head of the pollution trading arm of Morgan Stanley in London, likens cap and trade to a big piece of cake. quote.bloomberg.com/apps/news

Here’s how it works: Rights to emit specific number of tons of pollution, the cap of cap and trade, are given to power-plant operators by the government. The rights, though they may be worth millions or billions of dollars (notwithstanding the healthcare costs and environmental degradation the emissions cause), are given free of charge. The rights are tradeable, so that if one plant falls below the number of tons allotted by the government, it can sell its remaining rights to another plant exceeding its allotment of pollution. This way, the heavy polluter could avoid installing modern pollution control equipment or switching to cleaner fuel, such as natural gas, and maintain its profit margins. And the cleaner company could make windfall profits selling its extra credits. As expected, speculators step into the market and buy and sell pollution credits, garnering tons of commission charges and doing nothing to clean the air.

Cap and trade appears to be a regressive distribution of property rights, allowing those few already profiting from polluting to profit more, at the expense of the many. Also, according to a 2002 study commissioned by the Clean Air Trust, a Washington-based nonprofit group, pollution rights trading stifles innovation in emissions controls.

Cap-and-trade system for power-plants was started by the first Bush administration in 1990. It has replaced any talk of “COMMAND AND CONTROL,” which forces specific plants in specific areas to clean-up. In the words of the Illinois EPA, cap and trade gives power-plants “flexibility,” i.e., it lets them off the hook.

It is likely that cap and trade will be the regulatory regime for mercury from power-plants, which can mentally retard a developing fetus. As Jeff Holmstead, EPA's assistant administrator for air and radiation said recently, "it's only a very, very small number of people who are affected by local mercury depositions." www.newsday.com/news/local/wire/newyork/ny-bc-ny--mercurychallenge0805aug05,0,3838097,print.story.


THE DAMAGE DONE
Some basic science on the health effects of power-plant emissions since H.W. Bush initiated cap and trade:

Landmark 1995 American Cancer Society study, which helped to establish the link between long term exposure to power-plant particle emissions and premature death.

In a 2000 review of the health effects of mercury, the National Academy of Sciences Committee on the toxicological Effects of Methylmercury concluded that mercury exposure among women who consume large amounts of fish and seafood during pregnancy “is likely to be sufficient to result in an increase in the number of children who have to struggle to keep up in school and who might require remedial classes or special education.” EPA scientists estimate that one in six U.S. women of childbearing age has levels of mercury in her blood that are sufficiently high to put 630,000 of the four million babies born each year at risk of learning disabilities as well as developmental delays, difficulty with fine motor coordination, and other problems.

A 2002 follow up to the 1995 study found that long-term exposure to fine particle pollution increases the risk of dying from lung cancer and heart disease. The relationship between fine particles and adverse health effects was linear and without a discernible lower “safe” threshold.

A 2004 extension of these studies found that long-term exposure to fine particle pollution increases the risk of dying from ischemic heart disease (heart failure resulting from decreased oxygen supply to the heart muscle), arrhythmias, heart failure, and cardiac arrest.

A landmark 2004 study found that increases in ozone were associated with increases in premature deaths, including deaths from heart and lung diseases. EPA estimates that particle pollution takes an average of 14 years off the lives of people who die prematurely from particle exposure.

In Feburary, 2005, U.S. EPA scientists said in a new paper assessing the latest research on the microscopic industrial and natural emissions that more stringent air pollution standards for fine particulate matter may be needed to protect public health.


DIRTY HEIR DIRTY AIR
The Fisk and Crawford power-plants were put in operation during Richard J. Daley’s first of five terms as mayor. Now, during Richard M. Daley’s fifth term, the dirty machines are still going strong. The mayor and city council could make Chicago’s two dirty plants modernize almost as easily as the G-Rod could Illinois’ dirty-23 all by himself. However, it is very unlikely that “clean” will be part of the Daley legacy any more likely to be mentioned with the Blagojevich name.


TAKE ACTION
On its website, Policy Solutions LTD claims to analyze the “social landscape,” “non-market behavior,” “applying valuation techniques to cultural resources” and “the nature of environmental justice” for its clients and to “develop effective risk communication strategies.” Never once do the words "clean air" come together, nor is "clean," "health" or "breathe" to be found. "Global warming," "neurological damage," "heart attack" and "I can't breathe" are likewise never seen there.

Please take non-market behavior and communicate types of risk to:

henderson (at) policysolutionsltd.com

Policy Solutions Ltd.
111 West Washington Street
Suite 1415
Chicago, IL 60602
Tel. (312) 346-4640
Fax (312) 346-4641

Do not be part of the race to the bottom. Take command and control of dirty power.