Fighting against the cleanup of its pollution-belching coal power plants on Oklahoma. Breathers beware!
AEP-PSO: EPA's haze-reduction timeline 'not physically possible'
The battle over proposed EPA rules on regional haze and emissions could end up highly charged in more ways than one, AEP-PSO officials said Thursday.
The federal rejection of a state plan to reduce sulfur dioxide emissions at three Oklahoma coal-fired plants will challenge realism and reliability, Stuart Solomon said during a meeting with the Tulsa World editorial board to detail the electricity utility's issues with the EPA proposal. Solomon is president and chief operating officer of American Electric Power's Tulsa-based subsidiary, Public Service Company of Oklahoma.
Earlier this year, the U.S. Environmental Protection Agency shot down a state plan to reduce regional haze at the three plants over a longer time frame, instead proposing the 95 percent reductions within three years of a final approval. The affected plants include AEP-PSO's two coal-fired units at Northeastern in Oologah and similar OG&E facilities in Muskogee and Noble County.
"It's not physically possible to do this in three years," Solomon said Thursday.
AEP-PSO, which provides power to 525,000 customers statewide, estimated that installing scrubbers and other improvements within that three-year window would cost about $800 million, which ultimately would be passed on to customers. A highly contentious $82 million rate case approved in January 2009 raised bills about 7 percent for the average customer.
The new increases would add 10 percent to 12 percent on bills purely for the regional haze compliance issues, AEP-PSO estimated. Future carbon limitations could raise that overall increase from 20 percent to 25 percent.
The rejected state plan, which AEP-PSO and OG&E helped craft with the Oklahoma Department of Environmental Quality, reportedly would have achieved the same reductions over a longer time frame. The emissions controls would have been completed by about 2026.
"We're going to do the right thing from an environmental standpoint," Bud Ground, AEP-PSO's manager of governmental and environmental affairs, said during the meeting. "We want to do it in a way that doesn't cripple the customer or the economy."
The EPA's response indicated in its opinion that the cost of those improvements, such as coal scrubbers, was only about half of what AEP-PSO estimated. Ground replied that contractors and planners responsible for those kind of projects have worked on about $5 billion worth of work on projects.
"We think we know what it's going to take to build those controls," Ground said.
An EPA public hearing on regional haze held last week in Tulsa featured numerous residents applauding the stricter emissions standards and vowing they would be happy to pay higher rates. In reality, AEP-PSO officials said, most ratepayers are angry or at least resistant when increases are imposed.
A case in point is the utility's recent WindChoice Tariff option, in which customers can purchase pure wind power generated at Minco turbine farm for a $1.72 premium per 100-kilowatt hour block. Previous surveys indicated that a sizable portion of customers said they were willing to pay more, but so far only a couple hundred have signed up for the WindChoice option.
Wind energy in itself is not the final answer to cleaner power generation, Solomon added. Variability is always a challenge with wind generation, which forces utilities to use natural gas-fired plants to offset those factors.
And although some federal regulators and environmentalists opposed the use of coal, Solomon still believes that it's the most abundant and cheapest fuel source available for AEP-PSO and other power generators. Natural gas may be only $4 per million British thermal units now, but the price was up to $15 only a few years ago, and utility officials believe their greatest hedge is having a variety of sources.
Those are long-term issues, but AEP-PSO's immediate focus is on rebutting the EPA's findings while also moving toward cleaner-burning generation units, both coal and gas, Solomon said. A last resort would be state Attorney General Scott Pruitt's threat to sue the EPA.
Haze and sulfur dioxide are just the beginning for AEP-PSO and other utilities. An Edison Electric Institute chart adapted from a 2003 EPA report shows possible regulatory changes for the utility industry. The busy, color-coded timeline shows various rules and deadlines for ozone, sulfur dioxide, nitrogen dioxide, transport efficiency standards, ash, carbon dioxide and effluents.
Keeping up with all of those will be time-consuming and expensive, the AEP-PSO officials said.
"The EPA clearly has a role," Solomon said. "All we've said is the right way to do this is in a balanced way."
EPA's public comment period on the regional haze rules will end May 23. The rules may be put in final form by November.