AEP to close plants, trim 600 jobs to comply with EPA rules
By staff report
Published June 10th, 2011http://www.timesnews.net/print_article.php?id=9032750________________________
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American Electric Power on Thursday announced it plans to shut down several coal-fired power plants, convert or retrofit others, and cut as many as 600 jobs in the next few years to comply with regulations proposed by the U.S. Environmental Protection Agency.
Based on the proposed regulations, AEP will have to retire nearly 6,000 megawatts of coalfueled power generation; upgrade or install new advanced emissions reduction equipment on another 10,100 megawatts; refuel 1,070 megawatts of coal generation as 932 megawatts of natural gas capacity; and build 1,220 megawatts of natural gas-fueled generation.
The cost of AEP’s compliance plan could range from $6 billion to $8 billion in capital investment through the end of the decade. The company said high demand for labor and materials due to a constrained compliance time frame could drive actual costs higher than these estimates.
AEP said the plan, including retirements, could change significantly depending on the final form of the EPA regulations and regulatory approvals from state commissions.
The retirements and retrofits in the plan are in addition to more than $7.2 billion that AEP has invested since 1990 to reduce emissions from its coal-fueled generation fleet, according to the c o m p a n y.
Annual emissions of nitrogen oxides from AEP plants are 80 percent lower today than in 1990. Sulfur dioxide emissions from AEP plants are 73 percent lower than in 1990.
The company currently owns nearly 25,000 megawatts of coalfueled generation, approximately 65 percent of its total generating capacity. Coal would fuel approximately 57 percent of AEP’s total generating capacity by the end of the decade.
“We support regulations that achieve long-term environmental benefits while protecting customers, the economy and the reliability of the electric grid, but 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 Michael G. Morris, AEP chairman and CEO.
He said AEP has worked for months to develop a compliance plan that will mitigate the impact of the EPA rules for customers and preserve jobs, “but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25 percent of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and invest billions of dollars in capital to retire, retrofit and replace coalfueled power plants.”
“The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling,” Morris said.
Although some jobs would be created from the installation of emissions reduction equipment, AEP expects a net loss of approximately 600 power plant jobs with annual wages totaling approximately $40 million.
“We are deeply concerned about the impact of the proposed regulations on our customers and local economies. Communities that have depended on these plants to provide good jobs and support local services will face significant reductions in payroll and property taxes in a very short period of time.
“The economic impact will extend far beyond direct employment at power plants as 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,” Morris said.
He said 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 hopes that the EPA recognizes the impact of the proposed rules and develops a “more reasonable” compliance schedule.
“We also will continue talking with lawmakers in Washington about a legislative approach that would achieve the same longterm environmental goals with less negative impact on jobs and the U.S. economy,” he said.
“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, extend the construction job benefits, and ensure the ongoing reliability of the electric system.”
As part of AEP’s current plan, the company would permanently retire five plants — one in Virginia, three in West Virginia and one in Ohio.
AEP would retire units at other locations but continue operating some generation at those sites with retrofits or conversions to natural gas.
The nearest plant to be impacted is the Clinch River Plant in Cleveland, Va.
There, one unit would be shut down by Dec. 31, 2014, while two others would be converted to natural gas generation.
Based in Columbus, Ohio, American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. Appalachian Power, serving Virginia and the Kingsport area of Tennessee, is a utility unit of the c o m p a n y.
