July 12, 2007

AEP: Strict Emission Curbs Could Raise Power Prices 50%

AEP, the No. 1 industrial emitter of carbon dioxide in the U.S., is working on some innovative technologies to cut emissions, but has yet to tackle the kind of overhaul that many say will be required to make a serious dent in greenhouse gases, The Wall Street Journal reports.

Michael Morris, chairman and chief executive of the Columbus, Ohio-based utility, warns that strict emission curbs could raise power prices as much as 50 percent. He doesn’t think AEP can deliver significant carbon-dioxide reductions much before 2020, according to the article.

AEP is particularly interested in two technologies, one that would turn coal into cleaner-burning gas and another that would capture carbon dioxide so it can be buried. An initial gasification power plant in West Virginia will cost at least $2.4 billion, says the company, enough to single-handedly raise electricity rates in the state by 12 percent if it goes online five years from now.

The costs of cutting emissions is more problematic because utilities are dealing with federal restrictions on nitrogen oxides, sulfur dioxide and mercury. AEP, has earmarked $4.2 billion between 2004 and 2009 to control these other pollutants.

In addition to new technology at power plants, AEP is looking for ways to gain carbon credits. The company is paying Environmental Credit Corp. to put plastic tarps over lagoons holding livestock waste on farms to block methane from reaching the atmosphere.

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