ICF Consulting study predicts ‘California style’ NOx allowance

FAIRFAX, Va., Dec. 3, 2001 — ICF Consulting’s ‘Texas Air Regulatory and Power Market Outlook’ predicts that NOx allowance prices in the Houston-Galveston market will increase to high levels over the next five years, resulting in higher power prices as well.

New NOx regulations, scheduled to start phasing in on January 1, 2002, will also cause dramatic impacts on power flows.

“NOx allowance prices in the Houston area will approach the sky-high levels that contributed to the California energy crisis,” reveals John Blaney, managing director of ICF Consulting’s energy environment practice. He emphasizes, “Houston can avoid the disaster that occurred in California thanks to the growing electric generation capacity glut in the ERCOT power market.”

In spite of this, the strict NOx emission regulations for the Houston area will inevitably lead to curtailment — and in some cases mothballing or retirement of generation capacity. As a result, electric power flows into the Houston market will radically increase — taxing the transmission system in Southeast and Central Texas. NOx allowance prices in other regions will vary considerably — some being close to zero.

This significant range of allowance prices is sure to alter the existing configuration of power flows and affect the value of new generation capacity.

Industrial sources in the Houston-Galveston area will face a difficult challenge achieving compliance because they are small and expensive to control. Blaney added, “Some of these industrial sources will be at a significant disadvantage because they are competing in an international marketplace against companies with minimal emission control requirements.”

For additional information on the “Texas Air Regulatory and Power Market Outlook,” ICF Consulting’s complete suite of emission market outlooks (for Carbon, SO2, and NOx), and ICF Consulting’s bulk power services, please contact John Blaney at 703-934-3367 or [email protected] , or visit http://www.EmissionStrategies.com.

ICF Consulting, with more than 30 years of experience, helps clients optimize energy resources, meet environmental challenges, foster economic and community development, enhance transportation projects and policies, and manage information technology resources. ICF Consulting’s 800 employees are based in offices around the globe. The firm reported gross revenue of more than $109 million in 2000. For additional information, please visit the Web site at http://www.ICFConsulting.com .