Congress should clarify US power plant greenhouse gas rules: utility execs

Houston (Platts)--6Mar2014/332 pm EST/2032 GMT

The US Congress should step in to clarify impending Environmental Protection Agency rules designed to reduce greenhouse gas emissions from new coal-fired power plants, the heads of Duke Energy and American Electric Power, two of the country's largest electric utilities, said at an industry conference Thursday.

Duke President and CEO Lynn Good and AEP Chairman, President and CEO Nick Akins said they hope EPA will show flexibility when it imposes the proposed 1,100 lbs of CO2/MWh emission limit for new coal plants. That is well below the roughly 1,800 lb CO2/MWh US coal plants now emit and a target that many believe would require the use of carbon capture and sequestration technologies.

While EPA officials have said such technologies are feasible and available, utilities have maintained that the system either are not commercially available or are prohibitively expensive.

The two executives said they believe only Congress can give the industry the clarity it needs. Good and Akins made their remarks at the annual IHS CERAWeek conference in Houston.

EPA in September issued a proposal for carbon pollution from new power plants and the public comment period on the proposed rules is scheduled to end in May. President Barack Obama has directed the EPA to issue the new rules by June 1.

Good said Duke's 640-MW coal-gasification plant in Edwardsport, Indiana, emits about 1,500 lbs CO2/MWh. The unit, which cost the utility $3.5 billion to build, was designed to have CCS added, but Good said Duke now has no intention of adding CCS to the facility, mainly because it is too expensive.

AEP in September 2011 ended a successful 18-month, 20-MW CCS pilot project at its 1,300-MW Mountaineer coal-fired facility in West Virginia after state regulators barred the company from recovering from ratepayers any of the project's roughly $250 million cost.

"We know CCS is not ready for prime time," Akins said, adding that he hopes EPA will "look at all of its requirements" and consider their feasibility.

Both Good and Akins said their companies have made progress in reducing greenhouse gas emissions and suggested that the pace of future reductions should be evaluated. The two estimated the reductions gained so far at approximately 20%.

Akins, who said AEP is on schedule to retire 7,100 MW out of its 25,000 MW coal burning fleet by the middle of 2015, cautioned that the loss of that much capacity could lead to reliability problems. "Eighty-nine percent of that retiring 7,100 MW was called upon and ran during the recent polar vortex," he said.

Good said Duke has a "stranded investment" of between $7 billion and $8 billion in its coal fleet that is undergoing remediation. She said this stranded investment is often "overlooked" by regulators and that Duke had hoped for a long life for these facilities. "We'd like to leave them in the mix as long as we can," she said.

--Jeffrey Ryser, jeffrey_ryser@platts.com --Edited by Jeff Barber, jeff.barber@platts.com

http://www.platts.com/latest-news/electric-power/houston/congress-should-clarify-us-power-plant-greenhouse-21302945