AEP predicts need to shutter 25% of coal fleet

New pollution rules that have been proposed by U.S. EPA would lead American Electric Power Co. Inc. (AEP) to retire coal-fired power plants with 6,000 megawatts of generating capacity and to spend another $6 billion to $8 billion reworking the rest of its fleet, the company said today as it continued a push for action on Capitol Hill.

The Columbus, Ohio-based company, which owns about 25,000 MW of coal-fired power plants and gets about 85 percent of its electricity from burning coal, said it would install pollution controls on coal plants with another 10,100 MW of capacity, retrofit about 1,070 MW to burn natural gas and build another 1,220 MW of natural gas capacity.

All those changes would be driven by proposed rules requiring coal-fired power plants to cut their air pollution, handle chemical-laden coal ash differently and upgrade their cooling water systems to avoid killing fish. The company, which has drafted model legislation to delay the EPA rules, believes that the rules could be done more cost-effectively, CEO Michael Morris said in a statement today.

"With more time and flexibility, we will get to the same level of emission reductions, but it will cost our customers less and will prevent premature job losses," he said.

Under the compliance plan, AEP would close down three power plants in West Virginia, one in Ohio and one in Virginia. The company would also retire some of the boilers at coal plants in Indiana, Kentucky, Ohio, Texas and Virginia.


Having reviewed the rules, the company predicts that the cost of the upgrades and new power plants would be roughly equal to the $7.2 billion that it has spent since 1990 to cut emissions from its coal fleet.

AEP decided to release its plan because of the rampant speculation about the effect that EPA rules would have on the power sector, spokeswoman Melissa McHenry said today

This week, two coalitions -- one representing utilities that lean heavily on coal, and the other with members that have little to lose -- released competing analyses of the effect that the rules would have on the electricity market (Greenwire, June 8).

AEP keeps up Hill campaign

Legislation similar to the AEP-drafted bill, which would allow plants to run without new pollution controls if power companies pledge to shut them down by 2020, has yet to find sponsors on Capitol Hill.

But McHenry said the company will keep looking. EPA faces a number of court-mandated deadlines and restrictions on the policies it can choose, she said in an interview, so "we're continuing to talk to people about the need for legislation to allow these same emission reductions to be achieved in what we think would be a more reasonable, rational way, over a slightly longer period of time."

Sen. Joe Manchin (D-W.Va.), one of the lawmakers courted by AEP, lamented today that 250 jobs would be lost at coal plants in his state.

"It's decisions like the one made by AEP today that demonstrate the urgent need to rein in government agencies like the EPA, preventing them from overstepping their bounds and imposing regulations that not only cost us good American jobs, but hurt our economy," Manchin said.

Critics of the AEP campaign, including environmental and public health groups, say that allowing some power plants to avoid pollution rules until 2020 would take a heavy toll on public health.

EPA projects that two of its proposals -- the Clean Air Transport Rule, which would limit soot- and smog-forming emissions that cross state lines, and the "Utility MACT" rule, which caps the amount of mercury and other toxic chemicals that coal plants can release from their smokestacks -- would save between 20,800 and 53,000 lives each year.

It estimates that preventing those premature deaths, along with heart attacks and breathing conditions that are linked to emissions from coal plants, would be worth hundreds of billions of dollars per year.

"Enough is enough," said John Walke, clean air director at the Natural Resources Defense Council, while discussing the draft bill at a debate earlier this week. "The American people deserve to have this sector cleaned up the way other responsible sectors have cleaned up their air pollution."

The first phase of the Clean Air Transport Rule, which has been sent to the White House for a final round of review, would start next year, with stricter rules to follow in 2014. Power plants would need to comply with the toxic emissions limits in the proposed Utility MACT rule by 2015 or 2016, provided that the rules are finalized as planned at the end of this year.

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