Updated to include some of the impact of the new rule on companies.



) --

General Electric

(GE) - Get Report

stands to benefit from a recent Environmental Protection Agency rule that will require replacement of many power plants for the next few years, according to a Barclays Capital analyst report.

The EPA's rule created the first national standards to limit air pollution from coal and oil-fired power plants as well as mercury more than 20 years after the Clean Air Act Amendments. About 40% of the existing electric generating units don't have advanced pollution controls in place, the EPA noted.

Because the rule requires companies be compliant by 2015, Barclays analyst Daniel Ford expects companies to start placing orders in the second half of 2012.

All of this will benefit what Ford calls "arguably GE's most important business" -- GE Power. General Electric has basically not shipped any new powergen gas turbine units in the last 10 years because it has taken that long to clean out inventory, Ford wrote. Though profits on new shipments are negligible, fixed cost coverage will benefit margins, he added.

"As we look forward, EPA regulations combined with multiple other factors (cheap and available gas, for one) make for a landscape where big gas turbine orders should begin to pop in 2012-2014," Ford wrote.

Ford also anticipates that



via its cooling towers and transformers will benefit from the power plant shutdowns.

The Charlotte, N.C.-based company is one of the largest medium power transformer providers. SPX's $4.9 billion in total revenue in 2010 was flat compared to the previous year and weighed down in part by the company's power transformer business, its 2010 annual report said.

SPX made an investment in 2009 of $70 million to increase the company's ability to create large, high-voltage power transformers in its Waukesha Electric Systems. The transformers from this facility are for the North American market.

Two electricity producers --

American Electric Power

(AEP) - Get Report



(SO) - Get Report

-- protested the EPA's new ruling this summer.

To be in compliance with the EPA's new rule, AEP wrote this June that it would have to invest between $6 billion and $8 billion through the end of this decade to get rid of 6,000 megawatts of coal-fired power generation and put in new emissions-reduction equipment on 10,100 megawatts, among other adjustments. These changes as a result of the rule are in addition to over $7.2 billion that the company has used to try to reduce emissions since 1990.

AEP also anticipated that it would have layoffs as a result of complying with this new rule. It expects to lose 600 power plant jobs that had wages of $40 million.

"While some may argue that jobs lost at coal-fired generating plants will be replaced by jobs at natural-gas fired plants or by jobs installing the retrofits, the reality is that there will be a substantial net loss of jobs, payroll and taxes," Southern CEO Thomas Fanning in a statement in August.said

Southern anticipated a larger bill coming attached with compliance of this rule to the tune of between $13 billion and $18 billion through 2020. It would have to get rid of 4,000 megawatts of coal-fired power generation and add new emissions-reduction equipment on 12,000 megawatts, among other changes.

Barclays has an unchanged overweight rating on General Electric with a price target of $20. Shares of GE increased more than 3% on Thursday to $18.05, with trading slightly higher than the stock's three-month daily volume average.

-- Written by Alexandra Zendrian

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Alexandra Zendrian