NEW YORK (TheStreet) -- The Supreme Court Tuesday handed down a decision that was another nail in the coffin of coal power generation here in the U.S. I discussed the impact of the decision with Jim Cramer this morning.
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The Supreme Court overturned a federal decision targeting air pollution that crosses state lines. In essence, it gives the federal Environmental Protection Agency further powers to regulate the output of coal-fired plants in 26 states.
Although production of electricity from coal has been on the wane here in the U.S., even stricter federal regulations, which this Supreme Court decision will inspire, will add to the costs of retaining power production from coal or force utilities to retire coal-fired plants altogether.
Coal stocks such as Peabody Energy (BTU) - Get Peabody Energy Corporation Report, Arch Coal (ACI) - Get Albertsons Cos. Inc. Report and Alpha Natural Resources (ANR) are the most likely to immediately suffer from the decision. It is in some of the states more reliant upon coal generation that we will see increased costs.
Utilities in Kentucky, Indiana and West Virginia will need to invest more heavily in pollution-scrubbing systems for coal plants they keep. Ultimately, this will hurt the bottom line of large utilities like PPL Corp (PPL) - Get PPL Corporation Report and Duke Energy (DUK) - Get Duke Energy Corporation (DUK) Report.
Jim thought that more universal regard for the Clean Air Act was a positive for companies like General Electric (GE) - Get General Electric Company (GE) Report a leader in the manufacture of pollution control systems for utilities.
I talk more about the impact of the Supreme Court decision on coal stocks with Jim in the video above.
At the time of publication, Dicker had no holdings in stocks mentioned, but positions can change at any time.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 25 years of oil trading experience. He is a licensed commodities trade adviser.
Dan is currently President of
a wealth management firm and is the author of
published in March of 2011 by John Wiley and Sons.
Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts on
US and UK and
Dan obtained a bachelor of arts degree from the State University of New York at Stony Brook in 1982.