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AEP Says EPA Rules Will Raise Businesses’ Rates 10-35%

Proposed Environmental Protection Agency (EPA) regulations would cost AEP $6 billion to $8 billion by the end of the decade and raise electricity prices for its business customers by 10 to 35 percent or more, the utility said today.

AEP said that cumulative costs of EPA regulations have been “vastly underestimated”, and a constrained timeframe for compliance could drive actual costs even higher.

The utility outlined its plans for complying with EPA regulations including the Hazardous Air Pollutants Rule, Clean Air Transport Rule, Regional Haze Program Implementation Plans, Coal Combustion Residuals Rule and proposed Clean Water Act standards.

Based on the regulations as proposed, AEP’s compliance plan includes upgrading or installing new advanced emissions reduction equipment on 10,100 MW of coal plants, refuelling 1,070 MW of coal generation as 932 MW of natural gas capacity, and building 1,220 MW of natural gas-fuelled generation. But the plan could change significantly depending on the final form of the EPA regulations and state regulatory approvals, the utility said.

AEP said that some jobs would be created from the installation of emissions reduction equipment, but it expects a net direct loss of about 600 power plant jobs with wages totalling about $40 million a year. And the economic impact of the plant closures will extend far further, the utility said.

“Thousands of ancillary jobs are supported by every coal-fueled generating unit. Businesses that have benefited from reasonably priced coal-fueled power will face the impact of electricity price increases ranging from 10 percent to more than 35 percent just for compliance with these environmental rules at a time when they are still trying to recover from the economic downturn,” AEP chairman and chief executive officer Michael G. Morris said.

He added that the changes will significantly degrade transmission system reliability, particularly in the Midwest.

“The proposed timelines for compliance aren’t adequate for construction of significant retrofits or replacement generation, so many coal-fueled plants would be prematurely retired or idled in just a few years,” Morris said. “AEP’s compliance plan alone would abruptly cut generation capacity in the Midwest by more than 5,400 MW. Depending on the year, another 1,500 MW to 5,200 MW of AEP generation would be idled or curtailed for extended periods as pollution control equipment is installed.”

Under the plan, AEP would completely retire five coal-fueled power plants in Virginia, West Virginia and Ohio. It would retire some of the generating units at six other plants in Virginia, Ohio, Kentucky, Indiana and Texas. And it would install or upgrade emissions reduction equipment at seven other plants in Arkansas, Indiana, Louisiana, Ohio and Texas.

The retirements and retrofits in the plan are in addition to more than $7.2 billion that AEP says it has invested since 1990 to reduce emissions from its coal-fueled generation fleet. Annual emissions of nitrogen oxides from AEP plants are 80 percent lower today than in 1990, the utility said, and sulfur dioxide emissions are 73 percent lower.

The company owns nearly 25,000 MW of coal-fueled generation, about 65 percent of its total generating capacity. Under the plan, coal would fuel about 57 percent of AEP’s capacity by the end of the decade.

AEP said it will continue its discussions with lawmakers about a “legislative approach” that would achieve the same environmental aims with less impact on the economy.

For more details on AEP’s compliance plans, including which coal plans are to be retired, click here.

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6 thoughts on “AEP Says EPA Rules Will Raise Businesses’ Rates 10-35%

  1. Ha – this is pure propaganda. AEP burns coal – they have been dumping toxic emissions including lots and lots of mercury into the air and waterway and unlined containment ponds for decades. Coal is the leader for Greenhouse gas emisssions. Now they don ‘t want to pay to stop spreading toxins. And they don’t believe the science of climate change; so they try to scare people. Go ahead and phase out – nuclear and wind and solar etc will fill the gap and create more jobs. Also they toss out that old chestnut “degrade transmission system reliability – or the “lights will go out” if you shut down coal. What a load of cow dung.

  2. Aad that your preconceived notions don’t allow for an accurate understanding. A significant portion of these plants are slated to close and be retired anyway. It should be economics and the time to failure that makes that decision. Not the EPA.

  3. Sad, not aad. my mistake. And do you live in Virginia, West Virigina or Ohio? What makes you qualified to readily dismiss the reality of an aging electric grid? I mean besides your preconceived notions?

  4. If a “significant portion of these plants are slated to close and be retired anyway”, then the economic and business impacts of the EPA rules will be minimal. So AEP has no grounds for such complaints.

    And the electrical grid is aging, but that aging has nothing to do with what generating facilities remain open, or with what they are replaced. So no one is dismissing the reality of the grid. What is being questioned is the AEP claim that “the changes will significantly degrade transmission system reliability”.

    Last but not least, the comment by Williams that “It should be economics and the time to failure that makes that decision. Not the EPA” is incorrect. Economics should not be the driver for these choices – mitigating the effects of AGW should be. We are talking about large-scale societal impacts here – and avoiding or mitigating those impacts certainly takes precedence over the economic interests of any one company or industry.

  5. If it were to cost $100Billion to replace the “so called green house emitting power plants” the company dosn’t pay a dime of that, the consumers do. Bill do you want your electric Rates to double or triple? That is what all this green energy is doing. It costs us money not the corporations. Also if you believe the science fiction of climate change then apparently you have not actually looked at the data. Historically an increase in co2 FOLLOWS an increase in temperature not the other way around.

  6. Rusty,

    You repeat tired old denier claims that have long since been put to rest.

    The best science consistently concludes that CO2 changes lead temperature records – they do not follow them. And it’s just a matter of basic physics that CO2 does trap additional heat energy in the atmosphere and oceans – that fact is beyond debate. Additionally, deniers often fail to realize that temperature records reflect all sources of variations – both natural and man-made – so a simple-minded look at temperature records over time sheds no real understanding on the topic.

    And it is patently false that electric rates would “double or triple” in order to pay for renewable energy.

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