Less Regulatory Effort Needed To Achieve Federal Coal Conversion Goals

GAO was asked to review the implementation of the Power Plant and Industrial Fuel Use Act of 1978 to determine: (1) the status and likely achievements of the federal regulatory program to convert utility boilers to coal; and (2) the prospects for the use of coal in large new industrial boilers as compared to oil or natural gas.

In its review, GAO found that, for existing boilers, utility efforts to voluntarily convert to coal have reduced the need for regulation and that, for new boilers, increased oil and gas prices have reduced the need for regulating purchases. In fact, if the 23 voluntary conversions are completed, about 235,000 barrels of oil per day will be saved. In addition, industry efforts to convert existing boilers have benefited from the air quality compliance requirements and procedures which allow accelerated coal burning at converting facilities and provide that conversions are not subject to certain air quality requirements. Therefore, GAO believes that the congressional action to replace the regulatory enforcement program with a voluntary conversion program and the action to reduce program funding were generally warranted. Additionally, GAO believes that there is some evidence concerning electric utilities that the preferred fossil fuel for new boiler purchases is coal rather than oil and gas. However, depressed sales of large industrial boilers during recent years preclude verification of the extent to which oil and gas will be chosen as fuel by other types of industrial companies. Consequently, the benefits of continued regulation of the fuels used in large new boilers are uncertain.