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.
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), Arch Coal (ACI) 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) and Duke Energy (DUK).
Jim thought that more universal regard for the Clean Air Act was a positive for companies like General Electric (GE) a leader in the manufacture of pollution control systems for utilities.