Energy’s Four Letter Word

on June 13, 2011 at 11:15 AM

It starts with a ‘C’ and ends with an ‘L.’

Coal may have become the dirtiest word in the energy industry last week when American Electric Power (AEP) finally caved to continued Environmental Protection Agency (EPA) regulation pressures and announced that it would “prematurely” retire nearly 6,000 MW of coal generated electricity by the end of 2014.

“The cumulative impacts of the EPA’s current regulatory path have been vastly underestimated, particularly in Midwest states dependent on coal to fuel their economies,” said AEP Chairman and CEO Michael Morris.

“We have worked for months to develop a compliance plan that will mitigate the impact of these rules for our customers and preserve jobs, but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25% of our current coal-fueled generating capacity,” Morris added.

Reliability Worries

PJM Interconnect, the East Coast regional transmission organizations (RTO), released a statement to Breaking Energy, which noted that it too was concerned with the timing of the EPA regulations:

“Although not unexpected, the level of retirements and the short time period included in AEP’s announcement will require thorough analysis before we fully understand the reliability impacts of this action, if fully realized.”

The electricity market operator shrugged off broader industry speculation that the regulations would vastly increase electricity prices or adversely affect the broader sector and consumer pricing.

“It is premature to discuss the impact on electricity prices and how we will make adjustments to preserve the reliability of the transmission grid,” the statement said.

American Public Power Association (APPA) Vice President of Communications Nicholas Braden told Breaking Energy that the APPA, a cooperative of over 2,000 utilities nationwide, is also concerned about the future of coal in American electricity.

“APPA shares the concerns that AEP has about the coming EPA regulations and the lack of adequate time to comply with those regulations,” Braden said. “We do not know enough about the specifics of their proposal to comment beyond that.”

Although AEP plans to upgrade and install emissions reductions equipment on an additional 10,100 MW of coal power, it said that the EPA timeline for retrofits and equipment replacements was unrealistic.

AEP maintains that it shares the EPA’s goal of reduced emissions, but is also concerned with factors like jobs and the economy.

“With more time and flexibility, we will get to the same level of emission reductions, but it will cost our customers less and will prevents premature job losses, extend the construction job benefits, and ensure the ongoing reliability of the electric system,” Morris said.

Picture: AEP’s Mountaineer coal power plant in New Haven, West Virginia, as seen from across the Ohio River in Racine, Ohio, October 30, 2009.