Chairman Whitfield, Ranking Member Rush and members of the subcommittee, thank you for inviting me to testify today.

Southern Company is the leading energy supplier in the southeastern United States and one of the largest generators of electricity in the nation. We work hard every day to ensure that our customers have access to reliable and affordable power. Like the rest of our industry, we are committed to working with our communities, stakeholders and our customers to continue reducing our environmental impact. That is why Southern Company has in recent years invested over $8 billion dollars in environmental controls and intends to spend up to $4.1 billion to comply with existing, revised or new rules over the next three years.

We are glad that you are examining and discussing the Utility MACT rule that EPA recently proposed. We are very concerned with this proposal and believe that, if adopted, it could put the reliability and affordability of our electric supply at risk.

The rule would impact plants responsible for nearly 50 percent of total electricity generation. It would impose an unrealistic three-year timeline for compliance, at a time when the industry is laboring to comply with numerous other mandates. The result could be to reduce generating capacity below the minimum required to provide reliable service and also cause electric rates to substantially increase. However, we believe these risks can be reduced or avoided by moving forward on a reasonable schedule that reflects industry experience and the challenges of upgrading the nation’s generating fleet.

I have four points for you today.

The first is that the timeline for this rule is unreasonable. The agency has proposed to allow only 60 days to comment on one of the most burdensome and expensive rules that it has ever put forward. We looked at nine other less complex environmental rules and found that EPA had allowed between 120 and 180 days for comments on each of them. This is nearly a thousand-page rule with nearly a thousand more pages of technical supporting documents. Sixty days is plainly inadequate for the industry to analyze this rule and its effects and to offer meaningful comments.

But even a greater concern is the three-year compliance period that would follow this particular MACT rule. A study conducted for the Edison Electric Institute by ICF concluded that for the U.S. by 2015 over 80,000 megawatts of scrubbers and over 160,000 megawatts of fabric filter baghouses will be required to be constructed. Almost 80,000 megawatts of current coal capacity will retire and have to be replaced. As the CEO of a company that has installed more pollution controls than any other utility, I tell you that this cannot be done in three years.

That leads to my second point, which is that this rushed timeline could put the reliability of the nation’s electric generating system at risk. A major challenge of complying with these new rules is ensuring adequate reserve margins – that is, generating capacity that is available during times of high demand or during interruptions of service from baseload plants. According to Bernstein Research, the impact of the Utility MACT rule on smaller plants will cause regional capacity margins to plummet by 7 to 15 percentage points, into the single digits in some regions. Other studies have reached similar conclusions. The result will be a greater risk of power outages.

My third point is that the rushed timeline will also impact electricity affordability. The construction of the massive numbers of controls that I mentioned plus the costs of replacing the coal plants that will retire will require utilities to spend as much as $300 billion by 2015. This huge cost will certainly show up in customer’s power bills and will threaten jobs and any economic recovery.

My fourth and final point is that there is a better way to continue to improve our environmental performance while protecting our customers, reliability and jobs. We need a realistic compliance schedule, based on historical experience, that allows us to retrofit existing plants and to begin work on any replacement capacity. A realistic schedule would allow upgrades to be made in an orderly fashion without placing reliability in jeopardy or imposing undue additional cost increases on our customers.

To conclude, we believe that the Utility MACT proposal, on its current schedule and in its current form, puts at risk the reliability and affordability of power in the United States. These risks can be reduced by extending the rulemaking schedule and the timeline for compliance. During that time, we can work to improve and refine the proposed rule and, simultaneously, better prepare for any changes in our generation fleet. This is a common-sense solution that all stakeholders should be able to support.

I thank the committee for holding this important hearing today and giving me this opportunity to testify. I look forward to any questions you might have.