The Clinton administration has instructed three federal agencies to make sure that increased utility competition - a potential economic boon to consumers - does not increase air pollution.

The June 14 statement by the White House Council on Environmental Quality sought to head off worries that utility deregulation efforts by the Federal Energy Regulatory Commission would increase emissions of nitrogen oxides and other pollutants, adding to the pollution problems of East Coast cities, the Bay and other coastal waters.

Under FERC's new "open access" rule, public utilities are required to open their transmission facilities to other power generators. The rule, in effect, promotes competition between utilities as electricity could be sold across the power grid to locations hundreds of miles away.

The plan raised concerns that Midwestern power plants with excess generating capacity would increase production - and therefore increase the amount of pollution that drifts over Mid-Atlantic and Northeast states. Midwestern plants tend to produce power more cheaply - but with more pollution - than plants in the Mid-Atlantic and Northeast. [See "Utility deregulation plan a jolt to Bay cleanup effort," June 1996 Bay Journal.]

FERC, in its environmental impact statement, concluded the open access rule would not significantly increase pollution, but the EPA, eastern states and many environmental groups strongly disagreed.

In May, the EPA asked the CEQ - which settles environmental disputes between agencies - to review the issue. EPA Administrator Carol Browner said in her letter to the CEQ that she hoped the nitrogen oxide emissions and transport problem would be solved through the Ozone Transport Assessment Group, a state-led effort seeking to control ozone pollution throughout a 37-state region east of the Rocky Mountains. NOx is a major contributor to ozone pollution and the nutrient pollution problem in the Bay and other coastal waters.

If OTAG fails, Browner said the EPA would attempt to resolve the NOx emission issue through its power under the Clean Air Act to write pollution reduction plans for states. But if that cannot be done in a timely manner, Browner said FERC should be ready to take regulatory action to prevent pollution problems.

CEQ Chairwoman Kathleen McGinty said in her June statement that the open access rule should go forward as it could ultimately save consumers up to $5.4 billion a year in electricity costs. But because the full impact of the open access rule would not be felt for several years, she said FERC should use that time to explore pollution control actions so it could serve as an "important backstop" in the event that the OTAG and Clean Air Act efforts fail. In addition, she said the Department of Energy will develop a tracking system to monitor any emission changes that result from increased utility competition.

The decision immediately drew praise from several environmental organizations. The groups said the White House position was a strong message to states that if they did not solve the NOx problem through OTAG, the federal government would step in.

"Today's announcement adds a vital ingredient to the efforts of the eastern states' Ozone Transport Assessment Group to end a critical air pollution problem," said Joseph Goffman, senior attorney with the Environmental Defense Fund. "By reaffirming the White House's support both for the OTAG process and for the EPA's ability to use its Clean Air Act authority as well, today's CEQ decision provides crucial momentum in the fight to reduce the long-range transport of NOx emissions that prevent urban areas throughout the East from achieving healthful air quality. Added Ned Helme, executive director of the Center for Clean Air Policy: "This CEQ decision takes us beyond the FERC-related portion of the problem to tackle directly the reduction of NOx emissions across the board."

Group empowers consumers with green options

While utility deregulation has spurred concern about increased electrical generation from "dirty" power plants that operate with fewer environmental controls, it may also give consumers the chance to pick cleaner sources for their power.

As part of a New Hampshire pilot program, Working Assets, a private firm that promotes environmental and "socially responsible" consumer choices, is one of more than 20 companies authorized to compete for the business of about 17,000 customers in a two-year deregulation experiment, according to Greenwire, an environmental news service.

Working Assets is offering electricity that does not rely on power generated by nuclear or coal-fired plants, or from a controversial hydropower system in Quebec. Working Assets says consumers will pay less for power than they do now.

In Wisconsin, meanwhile, a group of seven utilities have teamed up to let consumers pay slightly more for energy from renewable and alternative energy sources. A similar program is expected in Massachusetts later this year.