Electric utilites face $41 billion outlay to comply with air regulations

Figures in an industry database indicate that US power utilities will have to spend a total of $41 billion to meet US EPA air pollution standards contested in two lawsuits.


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The database, The Utility Environmental Upgrade Tracking System, shows that utilities will have to spend $12 billion on air pollution control equipment over the next five years in order to meet requirements to reduce nitrogen oxides (NOx) that were recently upheld by a federal appeals court.

Earlier this month, the appeals court upheld a EPA rule directing 23 midwestern and southeastern states to develop a plan to reduce NOx. The ruling sets timetables and targets for NOx reductions in 19 states and instructs the EPA to review the application of the regulations in Georgia, Missouri and Wisconsin (see related story).

The power stations will have to comply with the ruling by 2003, with some delayed until 2005. The database identifies 179 projects where selective catalytic reduction systems are in the planning or construction stage. The report says that most of these projects were delayed by the court process and project schedules will have to be compressed in order to meet deadlines.

The database, published by McIlvaine, shows that a total of more than $41 billion will be required to bring old coal-fired power stations into compliance with new source performance standards. The EPA is in the process of suing seven Midwest and Southern utilities in order to force them to install appropriate air pollution-control technology at 17 ageing power stations (see related story).

The utilities face a tough battle in court because they originally argued that power stations built in the early 1970s should only be required to fit new air pollution control equipment if major modifications were carried out. This ‘grandfather’ clause in the Clean Air Act was introduced in the belief that the stations would eventually be shut down. Now the utilities must argue that the same power stations can operate for 40 to 60 years more without extra work.

One of the utilities, Tampa Electric, has already settled. First Energy is continuing to hold discussions with EPA in the hope of avoiding going to trial.

The database figures break down as below:

  • 210,000 MW upgraded at an average cost of $30/kw to meet new source performance standards for particulates: a potential total of $6.3 billion
  • 150,000 MW fitted with scrubbers: a total of $22.5 billion
  • NOx reduction costs: $12.5 billion
  • Total: $41.3 billion to bring old coal-fired plants up to same efficiency as new plants

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