By Cassandra Sweet
The U.S. Environmental Protection Agency issued new emission
rules Tuesday for diesel generators used for oil and natural-gas
production, emergency situations and other uses that the agency
said would cut costs while reducing air pollution.
The rules are in line with a settlement agreement the EPA
reached with EnerNOC Inc. (ENOC) and other companies to resolve an
appeals court challenge the companies had filed against the EPA
over an earlier version of the regulations.
Shares of EnerNoc closed Tuesday more than 25% higher at $15.76,
following release of the new rules.
The new rules will cut costs for diesel-generator users by $139
million a year, while reducing hazardous air pollutants, carbon
monoxide, nitrogen oxides and other pollution, the EPA said.
Diesel generators emit pollution that can cause cancer and can
aggravate respiratory and heart diseases as well as cause
neurological or other health problems, the EPA said.
EnerNOC and other providers of what are called "demand-response"
services, arrange with large electricity users to agree in advance
to cut their power use during times of peak power demand. Quickly
removing large chunks of energy demand can ease a strained power
grid on a hot summer day. In the U.S. Mid-Atlantic and other power
markets, such removal of power demand is considered akin to
providing additional backup power to the grid.
Many demand-response customers use diesel generators during
times when they reduce the amount of power they take off the
grid.
Under the EPA's new rules, diesel generators used during
emergencies, including during times of peak power demand, can
operate for up to 100 hours a year and the operators must file a
yearly report detailing the dates and times of their operation.
The new rules are good for EnerNOC; however, power-plant
operators that compete to supply power to the grid in the U.S.
Mid-Atlantic are likely to request additional changes to the rules,
said UBS analyst Julien Dumoulin-Smith.
"Expect vigorous appeal by the generators, and potential for
state-specific air regulations," Mr. Dumoulin-Smith said. He noted
that power-plant operators FirstEnergy Corp. (FE) and Exelon Corp.
(EXC), among others were likely to be negatively affected by
expanded opportunities for demand-response providers afforded by
the new EPA rules.
Write to Cassandra Sweet at cassandra.sweet@dowjones.com
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